CBDT Introduces New ITR Code for Social Media Influencers sparking Debate Among Tax Experts

The update recognises the growing number of digital content creators in India but it has also created confusion and concern among tax professionals. Many believe that classifying influencers as professionals may not be correct according to the current tax law.

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What Has Changed

CBDT has introduced five new codes in the ITR utility for the financial year 2024 to 2025. These are meant to better reflect the new kinds of income people are earning today. The new codes are:

• Commission Agents, Kachcha Arahitia – Code: 09029
• Social Media Influencers – Code: 16021
• Speculative Trading – Code: 21009
• Futures and Options Trading – Code: 21010
• Buying and Selling Shares – Code: 21011

The most discussed among these is the code for social media influencers.

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Why is the debate?

Social media influencing has been placed under the Profession category. But according to the Income tax law, especially Section 44AA of the Income Tax Act and Rule 6F, only a few activities are legally considered as professions. These include:

• Law
• Medicine
• Engineering
• Architecture
• Accountancy
• Technical consultancy
• Interior decoration
• Author or artist, if notified by the government

Social media influencers are not included in this list. That means, even though the ITR utility now calls influencing a profession, it may not have legal support under current tax rules.

What Tax Professionals Are Saying

Many chartered accountants have shared their views online. CA Himank Singla, who posted about it on X platform early this morning. He pointed out that forms and utilities should follow the law, not the other way around.

He and other professionals believe that income from social media influence should be treated as business income, not professional income. Until now, most influencers filed their returns under business codes using Section 44AD, which allows small businesses to pay tax on a fixed percentage of their total income.

If influencer income is wrongly treated as professional income, it may fall under Section 44ADA, which is only meant for specified professions. This section assumes that 50 percent of income is profit and the rest is expenses.

But this can be unfair for influencers, many of whom spend much more than that on equipment, advertising, and other costs.

What Problems This May Cause

If influencer income is treated as professional income under Section 44ADA, several problems could arise:

• Higher tax liability: Influencers may pay more tax if they cannot claim actual expenses.
• Lower audit limit: Professionals must get their accounts audited if their income crosses Rs. 50 lakh. For businesses, the limit is Rs. 1 crore or even Rs. 10 crore if payments are mostly digital.
• Confusion at assessment: Tax officers might apply different rules for the same type of income, leading to mismatches and disputes.
• Risk of penalty: Mistakes in classification could result in penalties or notices.

India’s influencer economy is growing rapidly. A recent report by IAMAI and Kantar said that the market could reach 2.8 billion US dollars by 2025. With so many people now earning from content creation, digital marketing, and online brand promotion, the tax system needs to evolve. But experts say that changes must follow the law.

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Until the CBDT formally notifies social media influencing as a recognised profession, most experts agree that Section 44AD should continue to apply, and influencer income should be shown as business income.

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