Earning income from YouTube: Here’s how Indian creators should calculate tax and file ITR
If you are an Indian content creator earning income from YouTube, it is important to know how your earnings will be taxed and how to report them in your ITR. Following the correct process can help you avoid reporting errors and potential scrutiny.
Isha Sekhri, Founder, Isha Sekhri & Associates LLP, explains how creators should calculate, report, and comply with tax rules on their YouTube earnings.
How should dollar earnings be converted into rupees?
According to Sekhri, Rule 206 of the Income-tax Rules, 2026 prescribes the telegraphic transfer (TT) buying rate for converting foreign-currency income into rupees.
“It prescribes the telegraphic transfer (TT) buying rate—not the TT selling rate, a generic ‘Google rate’ or the rate your bank actually credited you at,” she explained.
For YouTube/AdSense earnings, treated as business income, the applicable rate is the TT buying rate on 31 March of the relevant financial year, as published by SBI or another authorised dealer bank.
Is YouTube income subject to GST?
According to Sekhri, payments from Google outside India qualify as an “export of services” under Section 2(6) of the IGST Act. This makes AdSense income zero-rated under GST, with eligible input tax credit or refunds available.
- GST registration is generally required when aggregate turnover exceeds ₹20 lakh in a financial year, or ₹10 lakh in specified special-category states.
- Aggregate turnover is calculated on an all-India PAN basis and includes AdSense, domestic brand deals, and other taxable supplies.
- Once registered, a creator can export services under a Letter of Undertaking (LUT) without paying IGST upfront.
- Domestic brand sponsorships and similar taxable services generally attract 18% GST, subject to the applicable place-of-supply rules.
Does YouTube deduct TDS?
Sekhri said, “No Indian TDS is deducted on the AdSense/YouTube Partner Program payment.”
However, US withholding tax can apply to the portion of YouTube earnings linked to US viewers. She advised Indian creators to submit their US tax information through AdSense to claim the 15% India-US treaty rate, instead of the higher default 24%-30% withholding rate.
How is taxable income calculated?
Sekhri said YouTube/AdSense earnings are considered business income for a creator running this as a regular activity. Her illustration for FY 2025-26 assumes:
- AdSense earnings: $42,000
- Assumed TT rate: ₹93.50/$
- Rupee value: ₹39.27 lakh
- Domestic sponsorship income: ₹9 lakh
- Gross business receipts: ₹48.27 lakh
- Allowable business expenses: ₹9.60 lakh
- Taxable business profit: ₹38.67 lakh
Under the FY 2025-26 new-regime slabs, tax on ₹38.67 lakh works out to ₹7,40,100, plus 4% cess of ₹29,604, taking the total tax liability to ₹7,69,704.
After adjusting ₹4,000 in domestic TDS and approximately ₹1.47 lakh as foreign tax credit for US withholding, the illustrative net tax payable is ₹6.18 lakh.
Which ITR should YouTubers file?
According to Sekhri, YouTube/content-creator income is classified as “Profits and Gains of Business or Profession,” rather than “Income from Other Sources”.
ITR-3 is generally applicable when a creator maintains regular books and claims actual business expenses, particularly where foreign income or foreign bank details need to be disclosed.
Sekhri also outlined the key business expenses that creators can claim as deductions.
- Camera, laptop, lighting, and other equipment depreciation
- Editor, scriptwriter and freelancer payments
- Software and subscriptions costs
- Business-related internet and mobile expenses
- Studio/home-office rent and related costs
- Content-production travel and location expenses
- Marketing, collaboration and cross-promotion payments to other creators
- Professional fees – CA/tax filing fees
- Currency conversion fees on foreign remittances
How should YouTube income be reported in the ITR?
According to Sekhri, creators should report gross AdSense/YouTube earnings and domestic brand income as business receipts, after converting foreign income into rupees as prescribed.
- AdSense/YouTube payment statements showing gross earnings
- Form 1042-S showing US income and tax withheld
- Bank statements and FIRC/e-FIRC records
- Brand invoices and Form 26AS/AIS for domestic TDS
To avoid double taxation, Sekhri said creators can claim credit for US tax withheld under the India-US DTAA. Form 67 is used to claim the foreign tax credit for the FY 2025-26 example.
The credit is generally limited to the lower of the foreign tax paid or the Indian tax attributable to that foreign income. Creators should retain Form 1042-S and other evidence of the tax withheld to support the claim.
She also advised creators to pay advance tax if their net tax liability is expected to exceed ₹10,000, after considering applicable TDS and foreign tax credit.
Disclaimer: This is meant for informational purposes only. Please consult a qualified tax expert before making any financial decisions.
