Influencers now have a dedicated ITR code. Here's how they should file returns  

Meet Tanya, a lifestyle influencer with 3.2 lakh followers on Instagram. Last year, she collaborated with 14 brands, earned ₹28 lakh in digital payments, and received freebies worth another ₹5 lakh — including a smartphone, make-up kits, travel stays, and even a designer bag. 

While she proudly posted about all of it, come tax season, she’s caught in a dilemma: what exactly counts as her taxable income, and which form should she file? And more importantly, can she opt for the easy presumptive taxation route under Section 44ADA, like other professionals?

The confusion is understandable. For the first time, the Income Tax Department has recognised influencers like Tanya as a distinct professional category. A new profession code — 16021 — for "Social Media Influencers" was introduced in April 2024 in the official ITR utility for Assessment Year 2024–25, covering income earned during Financial Year 2023–24. The move is part of a broader push by the tax department to bring the booming creator economy under the tax net in a more transparent and structured way.

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New recognition, old laws

“The Income Tax Department’s introduction of Profession Code 16021 for ‘Social Media Influencers’ is an important milestone in formally recognising India’s fast-growing creator economy,” said Paritosh Dhawan, Advocate, Dhawan & Co. | Attorneys at Law. “For the first time, influencers, bloggers, vloggers, online coaches, and other digital gig workers have a specific code to declare their income instead of relying on generic classifications like ‘Others’.”

However, Dhawan points out that this new recognition hasn’t been fully aligned with the existing tax law. “While this move is progressive, it brings to light an important compliance gap,” he said. “The new profession code appears under the ‘Profession’ category in ITR-3 and ITR-4, technically making it possible for creators to opt for presumptive taxation under Section 44ADA. However, under the Income Tax Act, Section 44ADA applies only to ‘specified professions’ listed in Section 44AA(1) and Rule 6F... Social media influencing does not yet appear in this list.”

In short, while the ITR system accepts influencers as professionals, the underlying tax law does not. This contradiction could land creators in trouble if they take the 50% presumptive benefit under 44ADA without legal backing. “There is a genuine risk of audit queries or disallowance during scrutiny,” Dhawan cautioned. “As of 1 August 2025, there is no CBDT notification or Finance Act amendment that officially adds ‘Social Media Influencers’ to the specified profession list. Even the recent Notification No. 41/2025 dated 30 April 2025 does not address this issue.”

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What should influencers do?

Dhawan suggests playing it safe: “The more legally sound approach for influencers, bloggers, and digital creators is to treat their income as ‘business income’ under Section 44AD, which allows presumptive taxation at 6% for digital receipts or 8% for cash, if gross receipts remain within ₹2 crore (or ₹3 crore if cash receipts are under 5%).” For those with high production or travel costs, Dhawan recommends using ITR‑3, maintaining books of accounts, and claiming actual deductions.

He adds: “The introduction of Profession Code 16021 is a step in the right direction... but this intent must be backed by a clear CBDT circular or an amendment to Section 44AA and Rule 6F. Until then, digital creators should seek proper tax advice, understand the risks, and choose the filing route that aligns with the law.”

Freebies, barter and the shadow of Section 194R

The growing use of non-cash compensation in influencer marketing — be it gadgets, vacations or apparel — is also on the tax radar. Amit Gupta, Partner, Saraf and Partners explained, “The legislators through the Finance Act, 2022 had widened the scope for benefits or perquisites (wholly in kind or partly in cash and partly in kind) through business or profession and also introduced Section 194R to obligate deduction of TDS on such benefit or perquisite.”

He added, “The underlying rationale for such introduction was stated to be that recipients do not report the receipt of benefits (especially in kind) in their return of income, leading to furnishing of incorrect particulars of income.”

For creators like Tanya, this means that the value of the smartphone or the luxury stay — even if not paid in cash — needs to be declared as income. Gupta advises influencers to be extra cautious: “It would be vital for social media influencers to properly comprehend the applicable provisions with respect to scope of their taxable incomes, permissible deductions and applicable rates... to ring-fence themselves from undue scrutiny and penal consequences.”

Deadline relief and compliance checklist

To ease filing woes, the CBDT extended the ITR filing due date for AY 2025-26 from 31 July 2025 to 15 September 2025, citing the need for system preparedness and resolving TDS credit mismatches due to rejigged ITR forms.

Gupta believes influencers should use this window wisely. “Such facility of time should be utilized by all taxpayers including social media influencers to ensure timely compliance and eliminate any shortfalls in taxes due... to prevent additional outlays in the form of fees or penalties.”

He outlines four key compliance areas influencers should pay close attention to, choosing the right tax regime (Old vs New), as it directly impacts slab rates and deductions, assessing eligibility for presumptive taxation under Sections 44AD or 44ADA (with caution), Maintaining proper books and supporting documents, including valuation of all barter freebies and selecting the correct ITR form and understanding audit thresholds and filing obligations

Pranay Gupta, CEO of Variabl Money, a platform designed to simplify finance and taxes for creators, freelancers, and influencers said, “We’re building a financial OS that goes beyond mere compliance — our goal is to help creators become financially confident. Our app automatically syncs with Form 26AS to ensure real-time tracking of TDS deductions, so they’re accurately reflected during return filing. No more missed refunds, and no hidden deductions. Plus, our AI-powered CFO is always ready to assist with any financial or tax query, and for those who prefer it, we offer a human-assisted experience too.”

Gupta emphasises that filing taxes isn’t a one-size-fits-all process. “We usually recommend ITR-3 for most creators. ITR-4 is only suitable for those opting for the presumptive scheme under Section 44ADA — and even that comes with its own legal ambiguities. Section 44AD, on the other hand, is better suited for traders and traditional businesses. Presumptive taxation for influencers is still a grey zone, and it’s critical they get guidance tailored to their specific income mix.”

He also flagged another common compliance pitfall: the ₹20 lakh GST threshold. “Many creators unknowingly cross this and fall into non-compliance. Our system tracks GST eligibility in real time and gives timely nudges before it becomes a problem.”

Until clarity arrives from the Central Board of Direct Taxes (CBDT), influencers like Tanya must tread carefully, balancing tax efficiency with compliance.