Impact Of Changes In Youtube Tax Rules On Indian Youtubers


This latest update of Youtube may not be good news for non-U.S. creators as the video-streaming platform will start deducting taxes from them, beginning June 2021. This means Indian creators making money from views in the U.S. will have to part with some amount in taxes.

YouTube has also asked creators to submit their tax information in AdSense “to determine the correct amount of taxes to deduct”. The changes apply to all creators outside of the US, including the ones in India. However, there won’t be any such tax deduction for creators living in the US.

The tax withholding requirements can differ depending on your country of residence, whether you’re eligible to claim tax treaty benefits, and whether you identify as an Individual or a Business.

YouTube has a tax slab of 0-30% on the earnings creators generate from US viewers. The withholding rates depend on whether the country has a tax treaty relationship with the US. Indian creators, thanks to the Double Tax Avoidance Agreement or DTAA between India and the US, will have to pay around 15% of their YouTube ad revenue coming from their US viewers.

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Double Tax Avoidance Agreement
Source – globalEDGE-Michigan State University

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In a support page, YouTube said that its parent company Google has the responsibility under Chapter 3 of the US Internal Revenue Code to collect tax information, withhold taxes, and report to the Internal Revenue Service when a creator earned royalty revenue from viewers in the US. This has resulted in the implementation of the new tax requirements for YouTube earnings.

“If any tax deductions apply, Google will withhold taxes on YouTube earnings from viewers in the US from ad views, YouTube Premium, Super Chat, Super Stickers, and Channel Memberships,” the company in its support page.

YouTube has informed creators about the update and has asked them to provide their tax information in their AdSense account as early as possible. If a creator isn’t able to provide the information by May 31, the company said that it might need to deduct up to 24 percent of their total earnings worldwide.

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Source – Legal Cheek

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Many creators are criticizing YouTube for the tax deductions planned — given the fact that the company already takes a cut of revenue from the ads it serves on the platform. The change is also believed to largely affect small creators who don’t have millions of subscribers to attract sponsors for native advertisements. YouTube offers monetization to creators under the YouTube Partner Programme that requires creator accounts to have at least 4,000 public watch hours in the last 12 months and over 1,000 subscribers.

Experts Believe That There Is Not Much For Indian creators To Worry

Firstly, the majority of Indian creators have a local audience base. Only about 15% of YouTubers in India—chiefly those who create content in English—have a slight to a significant portion of their viewership in the US.

Further, the ad rates, called CPM or cost per thousand impressions, are 3 to 10 times higher for the US market compared to India, says Gautam Madhavan, founder of influencer marketing platform Mad Influence, “that even if you have to pay 15%-24% of that, it’s still good money.”

Most Indian YouTubers make less than a quarter of their earnings from platform ad revenue. “Some of the top YouTubers in the country make merely 20% of their income from YouTube ad revenue. The remaining 80% comes from brand collaborations across different platforms,” says Prince Khanna, co-founder of influencer marketing firm Eleve Media. However, business accounts like that of music labels may end up taking a bigger hit as some of them get significant ad revenue from their US viewership.

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