Mumbai-based ‘mominfluencer’ Avantika Bahuguna, Founder of MomsLeague Global, an online community for mothers, effortlessly juggles multiple client collaborations, brand deliverables and content for her own social media platforms round the year. Filing her income tax returns (ITR), however, is another matter altogether.Like many creators and gig workers, she finds it difficult to navigate the exemptions and deductions she can claim, tax deducted at source (TDS), and other tax rules that apply to her evolving line of work.“I’ve noticed that while many agencies deduct TDS from payments made to freelancers, there are instances where the deducted tax is not reflected or reported correctly, making it difficult to claim the credit while filing returns. This is an issue that deserves greater awareness and clarity so that freelancers know what to check and what steps to take if such discrepancies arise,” she says.Comedian and lifestyle influencer Linda Fernandes’ predicament is similar. “The biggest challenge is keeping track of income from different brands. As creators, we deal with so many collaborations, invoices and TDS deductions that it’s easy to miss something,” she says, adding that she received a notice for a minor difference in interest calculation last year. “It reminded me how important it is to double-check everything,” she says.ALSO READ | Presumptive taxation: Rebate to losses & deductions, what is the practical impact of changes under Income Tax Act, 2025Multitude of challengesCompared to salaried taxpayers, such individuals face a much more daunting compliance burden, with paperwork that stretches across the year rather than peaking only in July or August. “One of the longstanding challenges has been determining whether their income qualifies for the presumptive taxation scheme and, if so, whether it falls under Section 44AD (business) or Section 44ADA (profession),” says Tanu Gupta, Partner, Mainstay Tax Advisors.Put simply, the scheme exempts taxpayers engaged in small businesses or professions from the tedious process of maintaining regular the income at a prescribed rate and also, depending on other eligibility parameters, file returns using the much simpler Form ITR-4 (Sugam) instead of the more detailed ITR-3.Having a clear idea of the eligibility criteria is therefore critical. “Whether the activity is characterised as a business or a profession directly impacts the applicable presumptive taxation provisions,” she adds.Under presumptive taxation, businesses do not have to calculate their actual profits. Instead, the income is simply presumed to be 8% of total turnover or gross receipts. This rate is 6% for receipts through cheque or digital modes. If the actual income exceeds this deemed figure, the taxpayer must declare the higher amount. A few business activities, such as commission agencies, are not eligible for the scheme. “This applies for total turnover or gross receipts up to Rs.2 crore, or Rs.3 crore if not more than 5% of total receipts and payments are in cash,” explains Jayesh Sanghvi, Tax Partner, EY India.For professionals, the presumptive income is 50% of gross receipts, or the actual income if it is higher. “This applies for gross receipts up to Rs.50 lakh, or Rs.75 lakh if not more than 5% of total receipts and payments are in cash,” he adds. The forms introduced last year have added another layer of complexity. “The determination of whether a taxpayer carries on ‘business’ or ‘profession’, while straightforward in the majority of cases, can be tricky in certain cases – especially where influencers are professionals,” he says.ALSO READ | Confused about ITR forms? Check the right ITR for salaried, pensioners, students and other taxpayersNew code, new debateHerein lies the dilemma: should influencers be taxed as businesses, with just 6-8% of turnover deemed income, or as professionals, with 50% of receipts deemed income? The presumptive scheme under Section 44ADA is open only to specified professionals: lawyers, doctors, engineers, architects, accountants, technical consultants, interior decorators, and a handful of other professions notified by the government. “Social media influencer or content creator is not specifically included as a notified profession under Section 44AA,” points out chartered accountant Himank Singla, Partner, SBHS and Associates.Yet, last year, the tax department introduced a new code, 16021, for social media influencers in the ITR-3 and ITR-4 forms. Many taxpayers took this as official recognition: if a profession code exists for influencers, surely they qualify as professionals? “Legally, that conclusion is not necessarily correct because the Act itself has not been amended,” cautions Singla. In other words, a dropdown option in a tax form does not rewrite the law.The code is available in ITR-3 (for taxpayers with income from business or profession) and ITR-4 (for eligible taxpayers opting for presumptive taxation). “The inclusion of this code in ITR-4 suggests that such taxpayers may avail themselves of the presumptive taxation regime, subject to satisfying the prescribed conditions,” explains Gupta of Mainstay Tax Advisors. “However, there remains some uncertainty because no corresponding amendment has been made to the definition of “profession” for the purposes of Section 44ADA of the Act.”Chartered accountants feel the tax department ought to issue a clarification explicitly stating whether or not social media influencers can opt for presumptive taxation. “There should never be a situation where the return utility recognises a category, but the Act remains silent regarding its tax treatment,” asserts Singla.