The new wave of independent content creators experiencing a surge in revenue are extensively seeking the assistance of financial advisers, wealth management firms, and chartered accountants (CAs) to evade tax-related complications and strategically plan their investments. These investments range widely, from financial instruments and real estate to promising startups.
Sandeep Jethwani, the co-founder of wealth management platform Dezerv, sheds light on the unpredictable influx of earnings for content creators. Dezerv has been instrumental in handling assets for some of India’s top content creators, whose identities have been kept confidential.
Related article | An uphill climb for Indian gaming influencers to reach the stars
The influencer market in India, currently valued at ₹2,344 crore, is anticipated to escalate to a whopping ₹3,375 crore by the year 2026, exhibiting a compound annual growth rate of 18%. This data comes as per the ‘State of Influencer Marketing in India’ report released by EY, a consulting firm.
The career trajectory for content creators is typically unpredictable, with concerns about their longevity posing a considerable challenge, akin to other careers in the entertainment and sports spectrum.
Jethwani elaborates how the unpredictability of income channels could lead to concerns about their career sustainability. In order to address these concerns, creators typically look to make meaningful savings and investments during their lucrative periods. The common asset classes for these creators include financial instruments, startups, land, and property.
Renowned social media personality Shivani Kapila Tyagi, famously known as Littleglove, with an impressive following of 17.6 million on YouTube and Instagram, opines that risk tolerance and investment trends depend significantly on individual influencers.The younger generation is inclined towards tangible assets, while seasoned creators show a tendency towards long-term investments like businesses and financial instruments.
Tyagi, with an average monthly income of ₹4-5 lakh, strategically invests about 40% of her earnings back into content creation and allocates roughly 15% towards financial instruments like stocks and mutual funds.
A key challenge for influencers is the comprehensive understanding of tax laws.
As per Section 194R of the Income Tax Act, effective from July 2022, social media influencers are liable to pay a tax deducted at source (TDS) of 10% on freebies or any other form of non-monetary payment if the product’s value exceeds ₹20,000.
Hitesh Rupapara, a tax consultant from Surat, adds further, as content creation is legally recognized as a single proprietorship, influencers reporting an annual turnover above ₹20 lakh must register for Goods and Services Tax (GST). His firm HJ Rupapara and Associates provides taxation services for multiple influencers based out of Gujarat and Maharashtra with over a million followers.
Financial advisers play a crucial role in assisting influencers in effective tax saving strategies and optimizing wealth creation.
Further reading | Understanding the financial tales influencers tell
A senior executive of a private bank in Delhi, who handles influencers as clients, explained that many lifestyle-related expenses, like traveling and equipment, can be written off as business expenses for content creators thereby reducing their taxable incomes.
While some creators may initially find navigating tax laws and investment opportunities challenging, many are now taking proactive steps to educate themselves.
Travel content creator Isa Khan, who boasts 995,000 followers on his Instagram handle @khan.isa, shares his early struggles with managing finances and navigating tax laws, which led him to hire a chartered accountant. He’s also developed an interest in financial investment options and has started educating himself about them.
For more Personal Finance news, click here.
Discover more from Make Money Online and Work From Anywhere
Subscribe to get the latest posts sent to your email.
