Introduction:

In the era of social media and digital marketing, influencers have become a significant driving force in brand promotion and consumer engagement. In India, the rise of influencers has led to the implementation of legal regulations and tax implications that influencers need to be aware of. This article aims to provide insights into the legal and tax landscape for influencers in India, highlighting the key regulations and their implications.

1. Advertising Standards and Disclosure:Influencers in India must adhere to advertising standards set by the Advertising Standards Council of India (ASCI). Influencer marketing content should be transparent and clearly distinguishable as advertisements. The ASCI’s guidelines state that influencers must disclose any material connection they have with the brand or product they are endorsing. Clear and conspicuous disclosures, such as #ad or #sponsored, must be included in social media posts or videos to inform viewers about the promotional nature of the content.
2. Intellectual Property Rights:Influencers must respect intellectual property rights while creating content. Using copyrighted material without proper authorization can lead to legal consequences. Ensure that the content produced is original or properly licensed, and obtain necessary permissions for using any copyrighted material, including images, music, or video clips.
3. Privacy and Data Protection:Influencers should be mindful of privacy and data protection laws while collecting and using personal information. The Personal Data Protection Bill, which is yet to be enacted, will regulate the collection, storage, and processing of personal data. Compliance with data protection laws and obtaining consent from individuals whose data is being used is crucial to avoid legal complications.
4. Taxation and Income Reporting:Influencers in India are required to report their income and pay taxes in accordance with the Income Tax Act. Influencer income, including brand collaborations, sponsored content, and endorsements, is considered taxable. Depending on the nature of their engagement, influencers may be classified as self-employed professionals or sole proprietors. They must maintain proper records of income and expenses and file income tax returns accordingly.
5. Goods and Services Tax (GST):Influencers who provide services with an annual turnover exceeding the threshold specified under the GST Act (currently INR 20 lakhs for most states) are required to register for GST and charge GST on their services. The applicable GST rate varies depending on the type of service provided.
6. Collaborations and Contracts:When engaging in brand collaborations or sponsored content, influencers should ensure the presence of clear contractual agreements with brands or agencies. Contracts should outline deliverables, compensation terms, usage rights, and dispute resolution mechanisms to protect both parties’ interests.

Conclusion:

As the influencer industry continues to thrive in India, it is crucial for influencers to be well-versed in the legal and tax regulations governing their activities. Adhering to advertising standards, respecting intellectual property rights, ensuring privacy and data protection, and fulfilling tax obligations are essential for maintaining a compliant and sustainable influencer business. Staying updated with legal developments, seeking professional advice when necessary, and fostering transparent and responsible practices will help influencers navigate the legal landscape effectively and contribute to the growth and professionalism of the industry in India.

Anbac Advisors has helped 100+ influencers in navigating these challenges, being compliant always and help them as a one-stop solution for all legal, tax, audit and compliance matters end to end.

Team AnBac Advisors