Social Media Influencers And Doctors Need To Pay TDS

The new guidelines issued by the CBDT will come into effect from July 1, 2022

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The Central Board of Direct Taxes (CBDT) has issued new tax guidelines stating that social media influencers and doctors who get free merchandise for business promotions will have to pay a 10 per cent tax deducted at source (TDS), which will come into effect from 1st July, 2022. The provision was introduced in the Finance Act of 2022. As per reports, social media influencers are liable to pay TDS if the product given for them as part of the marketing strategies by a company is retained by the person. TDS will not be applied if it is return to the company.


"Whether the product given for sales promotion activity in social media is benefit or perquisite will depend upon the facts of the case. In case of benefit or perquisite being a product like car, mobile, outfit, cosmetics, and if the product is returned to the manufacturing company after using it for the purpose of rendering service, then it will not be treated as a benefit or perquisite for the purposes of Section 194R. If the product is retained, then it will be in the nature of benefits or perquisite and tax is required to be deducted accordingly under Section 194R of the Act," said CBDT in a statement.

In case of doctors, CBDT stated that if doctors are receiving free samples of medicines while employed in a hospital, Section 194R would apply on the distribution of free samples to the hospital.

The guidelines of CBDT reads, "To illustrate, the free medicine sample may be provided by a company to a doctor who is an employee of a hospital. The TDS under Section 194R of the Act is required to be deducted by the company in the hands of hospital as the benefit or perquisite is provided to the doctor on account of him being the employee of the hospital. Thus, in substance, the benefit or perquisite is provided to the hospital. Hospital can get credit of tax deducted under Section 194R of the Act by furnishing its tax return. It is further clarified that the threshold of INR 20,000 in the second provision to sub-section (1) of Section 194R of the Act is also required to be seen with respect to the recipient entity."

Apart from this, CBDT mentioned that for doctors who are working as consultants with a hospital and receiving free samples, TDS will ideally apply on the hospital first.

Influencer marketing is a form of social media marketing involving endorsements and product placement from influencers, people and organizations who have an expert knowledge or social influence in their field. Studies says that the influencer marketing industry grew from $1.7 billion in 2016 to $9.7 billion in 2020. In 2021, it indicates a steady growth and expected to reach at $16.4 billion.