New tax code for influencers: ITR rules change for FY25 - forms, deductions, key details here

If you're a content creator or influencer earning money through social media platforms, there’s a big update for you this tax season. For the first time, the Income Tax Return (ITR) utilities for FY 2024–25 (AY 2025–26) have introduced a specific code, 16021, exclusively for influencers who earn through promotions, product endorsements, or digital content creation.

“This code is now active under the ‘profession’ category in both ITR-3 and ITR-4 (Sugam),” said chartered accountant Himank Singla. Until last year, influencer income had no designated classification. This move is aimed at streamlining compliance for creators, online coaches, bloggers, and gig workers.

Choosing the right ITR form

Picking the correct ITR form is crucial. The wrong form may trigger errors, notices, or rejections. Influencers must choose between ITR-3 or ITR-4 (Sugam), depending on their income level and whether they opt for presumptive taxation—a simplified scheme that allows professionals to declare a fixed percentage of income and avoid maintaining detailed books.

If opting for presumptive taxation under Section 44ADA, use ITR-4. This applies to professionals with gross receipts up to ₹50 lakh (₹75 lakh if cash receipts are under 5%).

For those earning via business income, Section 44AD allows a presumptive rate of 8% (6% for digital payments) for income up to ₹2 crore (₹3 crore if cash is under 5%).

But here lies the confusion. “While the code is under ‘profession’, content creation isn’t listed as a ‘specified profession’ under Rule 6F,” Singla pointed out. This creates ambiguity about whether influencers should use 44AD (business) or 44ADA (profession). A clarification from the I-T department is awaited.

Don't skip the basics

Before selecting your ITR form, cross-check your Annual Information Statement (AIS) and Form 26AS on the income tax portal. Report any mismatches and ensure all income, TDS, and deductions match the official records.

While uploading proof isn’t required, keep all documents handy in case of future scrutiny. Avoid inflated or fake deductions—AI-backed systems now flag inconsistencies quickly.

Lastly, verify your return within 30 days of filing—either online or by mailing the signed ITR-V to CPC Bengaluru. Without this, your return won't be processed.

Whether you’re a full-time influencer or a side-hustler, getting your ITR right is non-negotiable. This new code may be the beginning of more structured taxation for India’s booming creator economy.

ITR 3 vs ITR 4

The Income Tax Return (ITR)-3 form is meant for individuals and Hindu Undivided Families (HUFs) earning income from business or profession, including remuneration from partnership firms. It’s often called a “master form” because it allows you to report all types of income—salary, house property, capital gains, and other sources. However, only individuals and HUFs with business or professional income are eligible. If your income falls under ITR-1, ITR-2, or ITR-4, you cannot use ITR-3.

ITR-4, on the other hand, is designed for individuals, HUFs, and partnership firms (resident in India) who opt for the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE. This scheme allows small businesses and professionals to declare a fixed percentage of income without maintaining detailed books of accounts—making tax compliance easier.

You can use ITR-4 if your income is under ₹50 lakh and comes from a small business, profession, or eligible vehicle leasing. But you're not eligible for ITR-4 if you’re a company director, hold unlisted shares, earn foreign income, have multiple house properties, or deal in crypto or lottery winnings.

Choosing the right ITR form depends on your income type, source, and eligibility under specific tax provisions.