Tedious TDS
How will the new TDS rule on freebies impact content creators ? An influencer marketer and a manager argue it out
“Creators will start promoting products they believe in, rather than just post an obligatory story” — VIVEK AHUJA
a creator gets a gadget worth ₹1 lakh, ₹1 lakh will be added to the creator’s income and they will pay tax on it” —NEEL GOGIA
This will build trust in creators among their audiences” Vivek Ahuja
With this new addition, ethical advertising will definitely start taking shape again. This move not only regulates and validates the creator economy, but also will help add a layer of authenticity to brand promotions. Creators will start promoting products that they strongly believe in and use themselves, rather than just post a story or give shoutouts as an obligation in return for a PR package. They will need to carefully pick and choose what brands align with their core values and fit their image ecosystem. This will benefit creators by building a trust factor and accountability with their audiences, and give them a long retainer with brands rather than push them to blindly jump to the next PR collaboration. It’s a win for brands as they’ll be able to find brand ambassadors who actually use their products.
For micro and nano creators who are just starting out, while this may seem like a setback as the majority of their collaborations are structured as barters, this also is an opportunity for them to reassess and push for monetary compensation for services, making it a fair exchange.
Vivek Ahuja is an artist manager and a content strategist
“The TDS rule will impact travel and tech creators the most” Neel Gogia
The new TDS rule will not have a positive impact, especially for nano or micro-influencers. They are dependent on barter deals to showcase their work to potential brands and followers. The tax will, hence, impact their wallets.
The process now involves brands having to pay 10 per cent TDS on the value of the barter, thus mapping that value to the creators’ PAN cards. So, the value will be added to the creators’ income. So, if a creator gets a gadget worth ₹1 lakh, that ₹1 lakh will be added to their income and they’ll pay tax on it. This will impact travel and tech influencers the most, as the rule is only applicable when the total value of the benefits in the financial year exceeds ₹20,000. With TDS, the process of monetisation and influencer marketing will become cumbersome for influencers, agencies, and brands, especially small businesses. Our recommendations for budding creators include a nominal fee for an association that can help them pay off the TDS. We will shed more light on this once there are more details on the rule. Neel Gogia is the co-founder of IPLIX Media