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Tax Liability in India on Adsense Earnings

Tax on Adsense Earnings in IndiaThe tax filing time is about to come in India. Many people from India are not sure on what sort of tax liability they have with respect to their Google Adsense earnings.

Are Adsense earnings taxable in India?
Yes. Adsense earnings are taxable in India. You can club these earnings your your business/professional income if this is your main source (or one of the main source) of income. If it is just your part time income and/or you are a salaried person, then you can club this income into income from “other sources.” Clubbing it with “income from other sources” may not be quite beneficial to you. Why? Read on.

Do I need to pay service tax on Adsense earnings in India?
No. In India, if you are running a website and selling/renting out space for advertising to somebody and getting paid for it, you are required to pay the service tax. But in this case, you are not renting the space, but Google is doing it for you. Google is collecting money from the advertisers and giving you the commission. Google is already paying service tax in India, so you don’t have to pay it. Else it would be a double taxation scenario.

Can I deduct my expenses from my Adsense income while calculating the earnings?
If you have added Adsense income in your “Income from business and profession”, then you can get your expenses deducted. For example, phone bills, electricity bills, internet connection bills, domain registration and hosting charges, website submission charges, advertising charges, content development payments, SEO payments, book/ebooks you bought, or any other expenses which you incurred for earning that money.

You cannot deduct your expenses when you add Adsense earnings in your “income from other sources.”

Are there any other kind of taxes on Adsense earnings?
No. Just pay your regular income tax and you are fine.

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Jim Karter on March 27th 2008 in Business, Google

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35 Responses to “Tax Liability in India on Adsense Earnings”

  1. pushkar responded on 28 Mar 2008 at 12:47 am #

    Now that’s what I call a Great Post :) We need more of such kind of post jim karter.

    I am assuming all kind of income like link sale, SEO, Website sale will also fell under same category, right ?

  2. chenzen responded on 28 Mar 2008 at 2:04 am #

    Thanks for the post. Even some CA’s are not
    sure about the tax liabilities of income earned
    through internet.
    Assume this also applies to other earnings
    like affiliate marketing etc.,

  3. harshads responded on 28 Mar 2008 at 2:20 am #

    Thanks for the information jim.
    I want to ask you, whether we need to pay taxes for the transactions we do from paypal to our bank account?

  4. Jim Karter responded on 28 Mar 2008 at 4:36 am #

    You need to pay tax on EVERY income you get.

    Also, if it a service you provided directly to your clients (something like SEO service), then you also need to pay service tax on that.

  5. Armaan Bhati responded on 28 Mar 2008 at 4:53 am #

    Oh.
    I am 17 year old and now need to pay tax.
    I have my PAN card.
    Its not my main source but I am planning to make it main source.

  6. Saptam responded on 28 Mar 2008 at 5:01 am #

    That is good information.

    there is a total amount for that income (in one finance year) you dont have to pay any tax. If adsense is your only income and you are below that limit, then you dont have to pay tax … let me know if I am wrong. (some one specify the amount plz).

  7. Jim Karter responded on 28 Mar 2008 at 7:13 am #

    For financial year 2007-2008

    Inome < 100,000 - no tax
    100,001 to 150,000 - 10% tax
    150,001 to 150,000 - 20% tax
    > 250,000 - 30% tax

    + 10% surcharge on total tax
    + Education cess @ 2% on tax plus surcharge, if your income exceeds Rs. 1,000,000

  8. Sudarshan responded on 28 Mar 2008 at 9:20 am #

    I have not reached to a stage where I am supposed to pay tax..Hope I reach it!!

  9. Armaan Bhati responded on 28 Mar 2008 at 9:54 am #

    I am not earning 100,000 this time.
    So no worry..

  10. massage lover responded on 28 Mar 2008 at 10:23 am #

    So you paying 30% tax….
    Its too much.You have to pay $15 000 to every
    $50 000.Its a robbery

  11. Yujin responded on 28 Mar 2008 at 10:53 am #

    Thanks for the info about tax. I have made some search about AdSense tax, but never find a clear info like this. I used to get AdSense income to my business account and used to pay income tax after business expense.

    Is there any special registration needed if you get income from outside India ?

  12. Gopal Tripathi responded on 28 Mar 2008 at 12:28 pm #

    again good info jim… thanks.

    Still there are some questions like..

    (1)Is there any registration mandatory with Indian Government to get income from abroad in USD?

    (2) what are the tax exemptions if somebody has got Adsense as main source of income in foreign currency?

    (3)what are your tax saving strategy as you earn over 50K USD every month and falls under maximum tax slab resulting heavy tax deductions?
    …THANKS

  13. Concierge Services responded on 29 Mar 2008 at 3:22 am #

    Thanks for this information. This information is definately useful for adsense ads publishers.

  14. K007 responded on 31 Mar 2008 at 2:10 am #

    Few things I would like to add …

    1. All money that is being paid to you in USD, are converted to INR by your financial institution. For eg. - if you use banks to take SWIFT payments it gets converted in INR.

    If you take paypal money, paypal deposits to your bank in INR. This deposit is shown as private transfer (as far I know).

    but to earn in USD you will probably need documents. Consult a CA or Tax guy to solve … :P

    2. If you get money from Adsense you dont need to worry about this conversion, Google does it for you. To pay the tax or file returns consult a CA or Tax specialist .. :P

    3. There are surely some ways to lower the tax amounts. One is investment for eg. For this consult your CA or Tax guy again .. :P

    There is one small professional tax also , which all needs to pay.

    4. If Jim has an employee (if not then take me .. lol) .. what ever he pays to that person, Jim will not need to pay the tax.

    The tax level goes like this way:

    eg. - A) you earn 99,999 a Financial year > you pay no tax. (I heard for male it is 150,000 this year and for female it is even more :D, someone plz confirm)

    B) You got 150,000 a financial year >
    You pay no tax for first 100,000/-
    then for rest 50,000/- you pay 10% i.e. 5000/-

    So if Jim gets $50000 in one fin year, he is not exactly paying 30% of it .. i.e. $15000

    Now calculate yourself how much he pays .. also i again think I may be wrong and you must consult that CA or Tax Guy again .. :P

    Hope this helps …

    Cheers

  15. Debt Cures responded on 31 Mar 2008 at 10:55 am #

    Hello-

    A great post showing why more people should try and work from home. You get so many more deductions when you work from home in your own business.

    Paying as little tax as possible is always a good thing. When you can help lower your taxes by having home office deductions is even better.

    -Adam

  16. Life is Colourful responded on 01 Apr 2008 at 12:14 pm #

    How do you show earnings in Paypal if the earnings are not yet transfered to Indian bank accounts?

  17. Tech blog responded on 01 Apr 2008 at 9:32 pm #

    Thats a nice article i was looking for

    Service tax should be paid only if your income goes >8 lakh (year 2007) or >10 lakh(will be effective from this year)

    Jim - how much tax you pay ? Do you have CA ? And any tax saving schemes ?

  18. Carol responded on 01 Apr 2008 at 10:21 pm #

    This is a very useful knowledge…I should find out how this is going in my country. Thanks Jim!

  19. Tech blog responded on 04 Apr 2008 at 5:21 am #

    Do you know anything about STPI tax scheme ?
    plz help in this. Really helpful.

  20. Denni responded on 04 Apr 2008 at 6:16 pm #

    Well, until now there is no tax in my country, and i hope never exist :))

    30% tax that’s roberry

  21. Tech blog responded on 05 Apr 2008 at 11:48 pm #

    Denni - no tax :eek: - which country you are from ?

  22. floyd responded on 30 May 2008 at 2:28 pm #

    one of em gulf countries i bet !

  23. Rupgoel responded on 01 Jun 2008 at 12:01 am #

    I reside in India. I have opened an account in Clickbank. I guess it pays you only in US dollars and not in INR . Suppose through reference sale if I get 50$ in my account because some body purchased some stuff online using my link. Do I have pay tax to US government, files a tax return in US ? Or only file a tax return to government of India . Can you guide me for TAX liability in this case.

  24. Jim Karter responded on 01 Jun 2008 at 3:07 am #

    Rupgoel, You don’t have to pay any taxes in USA. But you have to pay your taxes in India if you fall into taxable category.

  25. rupgoel responded on 01 Jun 2008 at 8:19 am #

    Thanks Jim.
    Ther are so many sites with lot of information but not as clear like yours.

    Taxable category is as below which was given by you earlier. Correct me if I am wrong.

    For financial year 2007-2008

    Inome 250,000 - 30% tax

    + 10% surcharge on total tax
    + Education cess @ 2% on tax plus surcharge, if your income exceeds Rs. 1,000,000

  26. rupgoel responded on 01 Jun 2008 at 8:21 am #

    I guess this didin’t got posted fully

    Inome less than 100,000 - no tax
    100,001 to 150,000 - 10% tax
    150,001 to 150,000 - 20% tax
    greater than 250,000 - 30% tax

    10% surcharge on total tax
    Education cess @ 2% on tax plus surcharge, if your income exceeds Rs. 1,000,000

  27. Jim Karter responded on 01 Jun 2008 at 11:39 am #

    rupgoel, this is for financial year 2007-2008. For this year it has changed drastically.

  28. Raoraj responded on 04 Jul 2008 at 12:50 am #

    Thanks for this informative post. as of now i’m not earning that much but, i will soon….

    Jim i want to setup a company in India but don’t know the procedure to do that. plz post on this topic as this will be useful for people like me.

  29. Vipin responded on 19 Jan 2009 at 2:22 pm #

    Hi,

    I am a domain broker in India and selling domains. Through this i earned approx 15000 INR per months. I also doing a job and my package is 156000 INR yearly.

    I receive domains payment through paypal in my salary account. So please suggest me, my domain income is taxable on not?

    Thanks is advance!

  30. Jim Karter responded on 19 Jan 2009 at 9:14 pm #

    Yes Vipin. It is fully taxable and will be coming in “income from other sources” section.

  31. Avisek responded on 04 Feb 2009 at 1:46 am #

    Jim I’d like to know if google bans adsense a/c for invalid clicks or not.Does the balance gets deducted for invalid clicks

  32. Startup Fiance responded on 10 Feb 2009 at 12:46 pm #

    Great info! Is taking deductions in India similar to how it is done in the US?

  33. Raj responded on 05 May 2009 at 12:07 am #

    Dear Jim,
    This is a real post I ever found. Keep it up. I am sure many doesnt have an idea about Google AdSense revenue. You just made it very clear on this. I am sure this post would help not only common citizens like me, also to few of the local Indian Tax Department staff. One can securely avoid paying tax for such income. one more thing I would like to know, is this mandatory to submit my PAN card number to Google in their TAX Information page?

  34. Amol Bharti responded on 04 Jul 2009 at 11:50 pm #

    Hi Jim,

    Thanks for such an informative blog on adsense tax in india. Keep up the good work.

    Best Regards,
    Amol

  35. Mak responded on 28 Aug 2009 at 2:19 pm #

    IS Company Register in STPI can claim google adsence income tax free, like they do to all work they doing export.

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