Taxation of Influencer Marketing: A Grey  Zone in Indian Tax Policy

Anuja Verma

doi:10.36948/ijfmr.2025.v07i05.57200

Taxation of Influencer Marketing: A Grey Zone in Indian Tax Policy

Author(s)	Ms. Anuja Verma
Country	India
Abstract	The emergence of influencer marketing has reshaped India’s advertising landscape, creating new opportunities for digital entrepreneurship while raising complex legal and fiscal challenges. With the growth of social media platforms such as Instagram, YouTube, and short-video applications, influencers increasingly derive income through cash payments, barter arrangements, and non-monetary benefits such as freebies and sponsorships. Although provisions under the Income Tax Act, 1961 and the Goods and Services Tax (GST) framework theoretically capture these transactions, significant ambiguity persists in classifying income, valuing barter arrangements, and distinguishing gifts from taxable consideration. Recent measures, such as the introduction of Section 194R mandating tax deduction at source on perquisites, reflect policy efforts to bring influencer income within the tax net. However, compliance remains burdensome for small creators, and risks of double taxation undermine the efficiency of the current framework. A comparative analysis of international approaches in the United States, United Kingdom, Australia, and Singapore reveals a trend towards explicit administrative guidance that clearly defines influencer taxation rules, especially regarding barter and non-monetary compensation. In contrast, India’s reliance on broad statutory provisions without detailed guidance sustains uncertainty and creates disputes. This paper argues that a balanced approach—through clear CBDT circulars, harmonisation of GST and income tax treatment, simplified regimes for micro- influencers, and platform-level reporting mechanisms—is necessary to ensure fairness, transparency, and administrative feasibility. By aligning tax policy with the realities of the digital economy, India can effectively regulate the influencer ecosystem without stifling its growth potential.
Keywords	Influencer Marketing; Income Tax Act, 1961; Section 28(iv); Section 194R; Goods and Services Tax (GST); Barter Transactions; Freebies; Advertising Standards Council of India (ASCI); Digital Economy; Tax Policy in India
Published In	Volume 7, Issue 5, September-October 2025
Published On	2025-10-04
DOI	https://doi.org/10.36948/ijfmr.2025.v07i05.57200

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Taxation of Influencer Marketing: A Grey Zone in Indian Tax Policy

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