No more freebies!

No freebies no more! Social Media Influencers had a joy ride until now. The government is coming hard on promotions of free products on socials by imposing a 10 percent TDS (Tax Deducted at Source) from July 1st. Besides your local influencers, doctors too will have to shell out 10 percent TDS for promoting medical products they receive from big pharmas. If the products are returned there will be an exemption. CBDT clarified that there’ll be no TDS if there’s a) cash discount b) sales discount or c) rebate under section 194R of the Income Tax Act. However free samples received in hospitals aren’t exempt from TDS.

TDS would include benefits endowed in cash or other forms such as car, mobile phone, computer, television, gold coin, free event tickets or foriegn trips.

The provision was introduced by the GOI to extend the tax base in the Finance Act of 2022. This is largely an unorganised sector due to the nature of the profession. Getting ‘em all on the same page as commoners who pay for their blood, sweat and toil, might seem like a good call from the CBDT. Is it though? These taxation curbs on influencer marketing could go sideways for many businesses. Influencers will now be wary of promoting free products.

Moiz Rafique, Managing Partner of Privy Legal Service LLP, remarks that this new provision will benefit businesses in the long run saving them from tax hassles they might have faced due to lack of one. Suvigya Awasthy of PSL Advocates & Solicitors opines that the move makes the employee (Doctor) as much liable as the Hospital or even more liable than the latter. Mashable India