June 25, 2017

Are all Indian blogs impacted by new GST taxation law? Questions answered



Indian blogs and GST

Brief points about Goods and Services Tax and why this post


India has ushered in a massive indirect tax reform by introducing GST in place of a number of indirect taxes that were being levied till now. It is applicable throughout India. The erstwhile sales tax, service tax, excise duty, etc all are subsumed into it.

There is clarity about GST applicability and rates when people and firms do traditional businesses. Blogging is mostly a very desegregated, individualized activity in which the blogger sells its blog space for selling his own or others' goods directly or through advertisements or other arrangements. The income streams are often varied and small, except for established bloggers who earn millions through blogging. There is a lot of confusion on many aspects of applicability of GST to blogging. Let's clear some cobwebs.


How is blogging in India impacted by GST?


Blogging is a service that the blogger provides. Under GST, being a service, it needs to be registered and taxed according to the applicable provision.

There is no doubt that blogging comes under GST. The income coming from advertisements, affiliation, sale of e-book/ software etc through the blog - all come under GST.


Provisions in GST relating to blogging


The following specific provisions of CGST/ IGST seem to relate to blogging: 

Section 24
The  following categories  of  persons  shall  be  required  to  be  registered under this Act:
xi) every  person  supplying  online  information  and  database  retrieval  services  from  a  place  outside  India  to a  person  in  India,  other  than  a  registered  person [etc]

Explanations (in different sections)
14. (1) On supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a non-taxable online recipient, the supplier of services located in a non-taxable territory shall be the person liable for
paying integrated tax on such supply of services:
Provided that in the case of supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a non-taxable online recipient, an intermediary located in the non-taxable territory, who arranges or facilitates the supply of such services, shall be deemed to be the recipient of such services
from the supplier of services in non-taxable territory and supplying such services to the non-taxable  online  recipient  except  when  such  intermediary  satisfies  [etc]

(16) “non-taxable online recipient” means any Government, local authority, governmental authority, an individual or any other person not registered and receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory. 

(17) “online information and database access or retrieval services” means services whose delivery is mediated by information technology over the internet or an  electronic  network  and  the  nature  of  which  renders  their  supply  essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,––
(i)   advertising on the internet;
(ii)  providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet;
(iv) providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;
(v) online supplies of digital content (movies, television shows, music and the like);
(vi)  digital data storage; and
(vii) online gaming;

16. (1) “zero rated supply” means any of the following supplies of goods or services
or both, namely:––
(a) export of goods or services or both; [etc]

This article in Economic Times tried to explain the matter, followed by similar others. What has happened is that instead of clarifying the doubts in the mind of blogger, these have made the matter even more confusing. 

This series of articles have said that
(i) if a blogger earns more than Rs 20 lakh (=2 million), he needs to register for GSTIN and pay GST [implying that those earning less need not pay GST];
(ii) the tax rate would be 18%; and
(iii) there would be no compensation (refund of tax credit etc).

The topic has been better discussed in a number of taxation websites and forums. We have contacted some CAs and also raised queries on some online forums to elicit answers to bloggers' questions. The general opinion is as follows (and there are different opinions on some aspects):
  • All bloggers who earn from their blogs come under the purview of GST as they are in the 'business' of providing services.
  • Having said that, it is not likely that the government would want students, housewives and part-time small earners to file 37 returns in a year and pay 18% of whatever little they earn. It is also unlikely that there would be a witch-hunt on that account.
  • However, when the earning of a blogger takes shape of business income earned by selling services, it would be necessary to register, pay GST and file returns. Such bloggers were already required to pay Service Tax @15%, now that rate turns into GST and goes up to 18%.
  • There are moderate to severe penalties for not registering, not filing returns, not paying tax and hiding income.
  • As of now (unless there is a clarification from CBEC or a case law decides against it), it is strongly felt that AdSense income will not invite GST, it being treated as export income because it is currently being received from Google Singapore in convertible value of foreign currency.
  • Incomes received from India-based affiliates, affiliate networks or advertisers would definitely come under GST. 
  • Payments received on sale of ebook, music, software, etc through the blog will definitely invite GST.
  • While some feel that Rs. 20 lakh limit is not relevant, some feel that it applies to blogging also and those earning less than Rs. 20 lakh a year need not register.
  • It does not matter whether you have an office or work on a laptop while sitting in your hostel room. If you earn income, it is taxable.

 

What should I do as a blogger?


If you are a small blogger and are earning a few bucks, do not panic. Concentrate on blogging and be alert. On this very blog, we'd keep updating bloggers about new clarifications on GST.

For Blogger blogs hosted by Google, the company has come out with a notice to update GST details and that in future its payment notices will be GST compliant. That should also not worry you. Update your details if it asks you for that. 

For your AdSense income below Rs. 20 lakh a year, sit back and keep alert about any clarifications.

If you make income through other sources using the blog, you should better consult a tax consultant. But don't panic. Consultants too are not sure about interpretation of different legal provisions and rules, so their advice too is not final.

Beware that Google may decide to start invoicing India-based advertisers and then paying India-based bloggers from their India office. If that happens, there may be invoices sent to you along with payments so that you calculate your GST liability. That may not happen soon.

This is just the beginning. There is a lot of mix-up and systems are not in place even for brick-and-mortar businesses. Things will take time to clear up. Government is already talking about a 2-month window for taking all businesses on board. Blogging will not be among the priority businesses.


DISCLAIMER

We are not tax experts. The opinions and suggestions given here are based on our understanding of GST's applicability to blogs based on our study of government documents, advice available on the web and advice sought individually from experts. Bloggers may take their own decisions and make sure that they do not break GST or any other law. 

June 21, 2017

How to review products on the blog and earn money

We earlier published a post on how to make shining product reviews on the blog and how it can be a handsomely paying stream. But halfway through that post, we realized that many blogger friends have not yet tried their hand on product reviewing at all.

The present post is for bloggers who have only recently created their blog or have a long running blogs but have not yet tried product (and service) reviews.


For very new bloggers: How to open a blog and bring it to a respectable level


If you are very new to blogging or have thought of starting your first blog, can I take you to another section on ITB where I have published many posts on creating the blog, nurturing it, avoiding pitfalls and so on: look in the right column, there is the 'New bloggers' corner' where you have links to a number of posts specially made for new bloggers. (It is better to read them first, because the present discussion will be more fruitful once you have learned the tricks of the trade and experimented with your blog for some time.)


What are product reviews?


Product reviews are nothing but articles about products (or services) produced and offered by others. The products can be daily-use items, books, music DVD, a spare part, big merchandise, a course for competitive examinations or an online service. Anything that people sell and buy. 


I sometime review products that I use. How do I go forward?


As a blogger, you might sometimes review a few products after using them, but that is not what we are aiming at. Such reviews do not come high on search pages and are not taken seriously by selling firms. We are talking about product reviews that the blogger can use to earn money.

start blog and review products to earn money

As a 'professional' review blogger, it is necessary that people start knowing you for your excellent product reviews. So, you will devote the blog fully (or its significant part) to reviews. In fact, keeping the reviews as one part of a wholesome blog works better than just reviews, especially when the other content has synergy with product reviews. For example, if you have a blog on make up, you can regularly review beauty products on the blog. A photoblog can regularly review photography equipment. A yoga blog can review yoga mats, yoga pants and yoga classes.

There are so many product review sites; why would firms and buyers care for a small blog? 

 

WWW is so big and there are so many people surfing it that there is space for everybody. You have small shops along side huge brand outlets even in the most famous shopping malls, isn't it?


You can sure have your place, and it would shine in a crowded marketplace too, if
  • Your reviews are exceptionally good so that people visit your blog again and refer it to others;
  • You promote the reviews through social media, SEO etc so that people know where your blog is and come to you for more;
  • You monetize them by having a paying arrangement with the brand/ seller so that you earn out of your hard work.

Yes, there are big review sites and blogs, but many people want to research beyond the opinion given there. People want specific information given without hiding facts. People also want a variety of opinion to arrive at a right buying decision. So, a blog that gains authority because of honest and informative reviews becomes more and more sought after.

Another points to note is that most big businesses of today started small. Most big travel bloggers (some with travel agencies, portals and many employees working for them now) have confided in us that they started as individuals wanting to travel a lot and writing about it. Some didn't know a bit about blogging! So, be sincere in your effort, work in the right direction and work a bit hard - and success will be yours.

Should I review a range of products or go for a narrow niche?


It will depend on a dozen factors, and so you should do good research. Don't go for a wide niche as you are a newbie blogger. How narrow, will depend on your location, the type of product you'd review, your expertise and so on.  

Generally speaking, go for a narrow niche but not too narrow. As an individual budding blogger, you can't compete with huge review and comparison sites. So, having a review blog on digital cameras will not get you anywhere unless you are patronized by a camera store or company. On the other hand, if you review products that are in demand and are special in some respect, your blog will soon be popular among those buyers and will come high on Google search pages when people search for those products. For example, restaurants in a tourist destination of medium size.

On a paper, write down the range of products or services you will like to review. For example, you are a cook/ foodie/ food connoisseur and will like to review restaurants in Delhi. It is a fairly good market and would perhaps get you good traffic and affiliations. But in 2017, there are at least two dozen well-established travel sites, two dozen blogs and a dozen trade directories with large number of reviews already posted there. You realize that you need to narrow down. So, make a list like this:  restaurants in Delhi... non-vegetarian restaurants... restaurants serving Bengali cuisine... Bengali non-veg restaurants in East Delhi... Best fish dishes available in Delhi...etc. Now, if you go for 'Bengali non-veg restaurants in East Delhi' out of this list, this might be too narrow and you might not have many good restaurants to review after ten reviews. Because there are not many big Bengali restaurants in this location (though it is as large an area as Paris), you might not get advertisements from these restaurants. Moreover, there may not be enough people looking for this type of food, so even if you are on the top of Google page, you might not get enough number of people coming to you. Hope the example helps how to determine how wide or narrow your niche should be.

Do study your audience well. Who will come to you and go by your advice? Where does the audience live? What are the likely lifestyle and search habits of the target audience? Should you review product of mass use or those used by the elite? And so on. 

Study your competition and adjust your niche. Google keyword planner is a great tool to study the keywords which are most used for search. You should use it also for optimizing your review posts for the right keywords so that more people come to you by searching that product on Google and other search engines.

Is it OK to approach brands/ sellers directly, offering reviews on payment?


You can have AdSense and affiliate ads (e.g. Amazon, CJ) from the very beginning but approaching sellers directly - wait. If you are a new blogger or you have not reviewed products so far, it is necessary that you build up a solid portfolio before approaching sellers directly. 

And yes, once you have a good number of reviews to show, it is not only OK to approach them, it must be your regular drill. 

Make a directory of firms that sell your type of product, and approach them by whatever means you feel as the best way - by email, phone or meeting in person - depends on various factors.

In whatever way you contact them, these are the best practices you should follow:

  • Choose the seller with care. You should not be desperate to get any seller. The chances of a shady seller giving you a good deal are more than an established one agreeing for it. But it will hurt badly in long run if you are not discreet in selecting the seller.
  • Be ready with your terms. Don't sell yourself cheap even in these early days. At the same time, don't show attitude. Be the real you. Offer short as well as long term deals, and make the long-term deals more attractive. 
  • Be ready with your arguments. Have convincing arguments - backed by facts - and at the end they should feel that a review on your site will help them.
  • Showcase your assets. Make a one-page flyer about the blog, which should describe the blog, its target audience, any good comments you have received, any deals you have made, and its traffic stats. Give one or two lines about yourself. Send it electronically as part of your email. Keep its print ready if you intend to meet sellers in person. 
  • Be polite and accommodative but slightly persistent. If the other guy wants to test your standing, he might  be cold to your offer. If that happens, walk out but leave the door open by suggesting that if they wish to still consider your offer in future, they could call you at ... number OR they should not mind if you ring them after a week just to see if they have a change of mind.

Why it is often wiser to buy the product than ask for sample


You will learn the tricks of the trade as you go, and you will get plenty of free products, as some beauty, fashion and travel bloggers have shared with us. We also know that books keep pouring it to bloggers who review books.

But one thing is sure; don't wait for the thing to come to you if you feel you have a duty to review that product. For example, highly reputed reviewers get smartphones free when these are launched, but even mid-level bloggers are not likely to get them free for a review. As a blogger reviewing mobile phones, you need to review the mobile early. In such a case, you will need to read all the information available on the web and based on your understanding of the features, you will present your views on that smartphone. You must, in such case, tell beforehand that your opinion/ advice about the set is based on ... (links) and you have not used the set yourself so far. 

We have seen many bloggers of beauty products reviewing products after buying and using them. Such bloggers get a fan following because the reviewer is under no obligation from the brand to project good aspects of the item. 

But there is no harm asking for the product or service, and it would come free especially when the seller is desperate or it won't cost him much to gift it to you (e.g. a book, an e-book, a software, a free stay before tourism season). 

How do product reviews go with affiliate marketing and AdSense?


There is no harm having any type of ad on the blog along with reviews. However, sometimes a seller who gives you good money for his reviews might put the condition that you will not serve his competitor's ads. But don't worry; such situations can come when you are an expert - and in that case you will have all the wisdom to take the right decision.  

What if seller demands only praise, no honest review?


Yes, you will have to deal with such situations. That's why I said above, choose the sellers discreetly and be ready with your terms. 

You have opened the blog for earning from blogging and reviewing, not for fighting with sellers or teaching the bad ones a lesson. So, avoid bad sellers from the beginning. After that, you will have good sellers whose products and services will be genuinely good. The wiser the seller, the more open he will be to nuanced criticism.

If you find a product bad after using it for free, you can tell the seller, your review will have those bad points or at least the review will not be all positive. So, either he improves the product (e.g. customer service in a hotel or a bug in software), takes it back from you (e.g. key for a software), agrees for the review, or you don't carry the review. You can have your say only when you had made these terms clear before you used the product - that's what makes it even more important to make your terms clear in advance.

Why should a reviewer put disclosure; does it not sound apologetic? 


Disclosing your affiliation with the product or service under review is a good practice. Instead of wakening you in any way, it gives you great advantage in terms of credibility. It also gives you higher marks in internal rating done by search engines. Moreover, if someone gets hurt because of your recommendation, your disclosure would save you from any legal action by the users.  

Take a few examples. You would caution that the face cream you have reviewed has a high concentration of aldehydes and products with extra formaldehyde can cause rashes. Or this particular yoga should not be done by people with a history of bone fractures. Now if a lady gets allergy after using that face cream or a guy breaks his bone after doing that tough yoga asana, they won't be able to sue you. Similarly, if you mentioned that your views about that food supplement are based on your experience and you are in no way connected with the brand, people would take you at face value. (But it must be true too.) If you review a restaurant after a press trip or a paid dinner and mention about it, people would believe you more and will even forgive you if they find that you have praised the restaurant slightly more than it deserves. Got the point?

By the way, the US FTC has detailed guidelines on what should be taken in mind when endorsing a product. [This is a link to a pdf doc, which might not read well on mobile.] 

We have still many ideas that we have got from blogger friends. If you have any questions or wish to share your experience with fellow bloggers, either put them as a comment or send to kp.nd.2008@gmail.com . We intend to come with another article on the subject later.