GST i.e Goods and Service tax has come into effect in India from 1st July 2017. GST is a uniform form of indirect tax which aims to simplify the present tax structure. At present there are different types of taxes (mentioned below) which are levied on sale, transfer, purchase, barter, lease, and/or import of goods and services. With GST, all these taxes will be merged in a single tax that will be called as GST.
Pre-GST Indirect Tax Structure
At present, Indirect Tax structure in India is as follows:
- a) Excise Duty: Applicable on the manufacture on the goods.
- b) Service Tax: Taxable at the provision of the service
- c) Sales Tax/VAT: Taxable at the time of Sale of goods.
- d) Customs Duty: Taxable at the time of import or export.
Post GST all the above taxes (with some exceptions) will be merged with GST.
Before understanding how, GST will be affecting the bloggers, let us try to understand the model of GST.
It would be dual GST system with central and state simultaneously levying the duty on a common tax base.
If a blogger provide a service (like content creation) within a state both CGST & SGST will be applicable
CGST Rate = 9% and SGST = 9%
Service Price =100
CGST = 9 and SGST = 9
Thus, the Blogger will pay total GST of 18, 9 as CGST to central and 9 as SGST to the State. of course will be eligible to take input credit, wherein CGST tax credit can be used only against payment of CGST and not for SGST and same way SGST credit can be used only against payment of SGST.
How GST will impact Bloggers
Under GST, bloggers and affiliate marketers fall under the online information and database access or retrieval services (OIDARS) i.e. those who provide electronic services like advertising on internet, cloud services, digital data storage, digital content (movies, e-books, music, shows), online gaming, data or information retrievable in electronic form, etc. The above service attracts GST rate of 18%.
Now let us try to understand, whether bloggers are required to register under GST and if Yes, When?
To keep things simple, we will cover only rules which will affect the bloggers.
Registration under GST
Under GST all the person, supplying goods or service are required to register their business as per the GST rules.
However, registration to GST is exempted if the turnover in financial service is less than Rs. 20 lacs (or Rs. 10 Lacs in special cases)
However, we need to note here that the exemption is only applicable on the supplies within a state that means if the service provider provides service outside a state or outside country than above exemption limit is not applicable.
Now, let us try to understand this provision for a blogger. Bloggers provide services like a content creation, advertising, affiliate marketing. All these services are provided not only within the state but also outside state too. For eg,
- In case of affiliate marketing, sale of goods may occur in any part of the country i.e outside the state of blogger.
- In case of Content Marketing, Bloggers generally provide service to the companies which do not have their business place in the same state where blogger resides.
- In case of advertising, most of the times it is with the third party which does not have its principal place of business in the same state where blogger resides.
Thus, it is clear that most of the service which blogger provides is outside the state and thus the threshold limit of 20 Lacs does not applicable for him. So, the bloggers need to take registration under GST.
What is the rate of GST for blogger?
Sale within State: If the service provided is within the state for eg. From Bangalore (Karnataka) to Bangalore (Karnataka), both CGST and SGCT will be applicable. CGST tax credit can be used only against payment of CGST and not for SGST and same way SGST credit can be used only against payment of SGST.
Sale outside State: If the service provided is interstate for Eg. From Bangalore (Karnataka) to Jaipur (Rajasthan), IGST will be applicable. IGST credit can be used to set off against IGST payment.
Export: Most of the bloggers get the income from the advertising or content creation which is from the service receiver which is outside India. Such services are called as exports of services. Exports will be treated as zero-rated supplies. 0% tax will be payable on the export of goods and services. This means bloggers will be required to register and file the GST return with 0% as Output GST. However, the credit of input tax will be available and same will be available in the form of the refund to the exporters.
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