Taxability of Udemy's Indian instructors' income in India
In India, income earned from teaching online courses on platforms such as Udemy would generally be taxable as income from business or profession. This means that Indian instructors who earn income from teaching on Udemy would need to report their earnings as business income on their tax returns and pay tax on the income at the applicable tax rates.
Instructors may be able to claim deductions for expenses incurred in the course of earning this income, such as the cost of creating and promoting their courses, internet and phone expenses, and any other expenses that are directly related to the business of teaching on Udemy.
It's important to note that the tax treatment of income earned from teaching on Udemy may vary depending on an individual's specific circumstances. For example, an instructor who is registered as a sole proprietor or as a member of a partnership firm may be subject to different tax rules than an instructor who is registered as a private limited company.
I recommend that Indian instructors who earn income from teaching on Udemy consult with a tax professional or seek guidance from the Indian tax authorities to understand their tax obligations and ensure that they are complying with all relevant tax laws.
GST Applicability
In India, the income earned by Udemy instructors in foreign currency for courses uploaded by them on Udemy's e-commerce website and sold to students all over the world would be considered as an export of service for GST purposes.
Under the GST Act, export of services is defined as the supply of any service when:
The service is provided from India to a recipient outside India
The payment for the service is received in convertible foreign exchange
The service is not a taxable service as per the GST Act
As the income earned by Indian Udemy instructors from providing online courses to students in various countries meets the above criteria, it would be considered as an export of service for GST purposes.
As export of services is exempt from GST in India, the instructor would not be required to pay GST on the income earned from Udemy courses. However, the instructor will need to file a GST return and claim the exemption for export of services. It is recommended that the instructor consult with a chartered accountant or tax professional for guidance on GST compliance in India.
Benefits of Accounting
The benefits of accounting under the income tax and GST laws in India are:
Compliance: Proper accounting helps ensure compliance with the income tax and GST laws in India, which is essential to avoid any penalties or fines.
Transparency: Proper accounting helps provide transparency in the financial affairs of a business, which is essential for building trust with stakeholders such as investors, lenders, and customers.
Tax planning: Proper accounting helps in tax planning, which is the process of minimizing tax liability by optimizing the structure of a business or the timing of transactions.
Decision making: Proper accounting helps in decision making by providing accurate financial information that can be used to assess the performance of a business and make informed decisions about future investments or expansion.
Record keeping: Proper accounting helps in keeping accurate and organized records, which is essential for running a business efficiently and effectively.
Financing: Proper accounting can help in obtaining financing from banks or other financial institutions, as lenders typically require accurate financial information to assess the creditworthiness of a business.
Please note that this information provided is for general guidance only and is not intended as legal or tax advice. The tax laws and regulations in India are subject to change and it is recommended that you consult with your chartered accountant or tax professional for specific advice on your individual situation.
Thank you
CA Abhishek Jain
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