GST Applicability of income Received from Google Adsense
After implementation of GST, there are still many areas which are not clear. out of them, one is the income earned by a YouTuber.
With data costs so cheaper and the emergence of the 4G network, it has become much easier for the people to make and publish videos.
A YouTuber earns income through various sources.
Some of them are –
(i)- Google AdSense i.e. earning money through advertisement and marketing,
(ii)- Affiliate marketing and direct advertisement,
(iii) Sponsored Reviews, etc Before starting any further we need to know what kind of service a youtuber provides to AdSense for which he is paid.
Nature of Service
Youtuber provides online services through the internet. As per Sec 2(17) of IGST Act, “online information and database access or retrieval services” means services whose delivery is mediated by information technology over the internet or an electronic form and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as-
(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or the internet;
(iv) providing data/information, retrievable or otherwise, to any person in electronic form through a computer network;
(v) Supplies of digital content online ( i.e. movies, television shows, music and the like);
(vi) digital data storage; and
(vii) online gaming.
Google places ads on the content shared by the content owner or the YouTuber who in turn gives right or permission to Google to monetize content by placing ads. This constitutes supply for which youtube is paid.
Thus a youtuber provides a taxable service to AdSense.
Place of Supply
Google AdSense or the contracting agency is Singapore based i.e. Google Asia Pacific, Singapore.
Considering Sec 13 of IGST Act, place of supply shall be the location of the service recipient i.e. outside India.
Whether such a service can be considered as export?
For this, we have to check the conditions as laid in Sec 2(6) of IGST Act which says export of services’ means the supply of any service when,-
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange [or in Indian rupees wherever permitted by the Reserve Bank of India]; and
(v) the supplier of service and the recipient of service are not merely establishments of distinct persons.
So if I am providing service as a YouTuber (supplier located in India) to Google Asia Pacific, Singapore (Google AdSense- supplier located outside India), receiving payment in convertible foreign exchange ($) and I and Google are not merely establishments of a distinct person it would mean I am exporting services.
Whether such Export can be considered as Zero rated supply?
According to Sec 16(1)(a), Zero rated supply includes the export of goods or services or both. It means youtuber provides zero-rated services to Google AdSense for running advertisements on his YouTube video.
Since the youtuber provides exempt services i.e. services attracting 0% tax, he is covered under sec 23 of CGST Act and therefore not liable for registration provided he does not provide any other taxable service.
However, GST registration shall be required if the total value of services provided by the youtuber exceeds Rs 20.00 Lakhs during the year.
Thus if you Tuber receives income only from Google Adsense, he is not liable to pay GST.