Don’t let the new TAX compliance get you down in 2025 

Navigating Tax and Taxation for Artists and Creative Professionals in India (Updated for 2025)

Taxation can be a labyrinthine journey for artists and creative professionals in India, given the intricate nature of their income streams and the diverse tax implications they face. From income tax considerations to navigating the complexities of Goods and Services Tax (GST), understanding the taxation landscape is crucial for maintaining compliance and optimising financial management. In this comprehensive guide, we delve into the intricacies of taxation for artists and creative professionals, exploring both direct and indirect tax structures and providing insights to help navigate this complex terrain.

Direct Tax Considerations for Artists and Creative Professionals

Income Tax (IT):

IT filing for artists and creative professionals entails meticulous attention to detail, given the diverse sources of income they often rely on. From freelance work to royalties, art sales, and licensing, each income stream requires careful reporting and categorisation.
Freelance income can fluctuate, necessitating diligent tracking and reporting during IT filing. Similarly, royalties earned from published or utilised work, such as lyrics or music, must be accurately categorised and reported.
Art sales may attract capital gains if the selling price exceeds the acquisition cost. Proper record-keeping of sale transactions, including purchase price and date, is essential for calculating capital gains accurately.

Music Royalty and Tax Deductions:

Income – Expense = Profit.

You are taxed on your Profit and not on your overall income. But not all expenses can be treated as deductions. Therefore reasonable, legitimate, justified business expenses can be offset if you know what they are and how to present them correctly.

Tax deductions or deductibles play a vital role in lowering taxation liability for artists and creative professionals. Please note this is separate term from TDS.

Expenses such as studio rent, art supplies, sound banks and packs, professional equipment, and training courses can be claimed as deductions, provided proper documentation is maintained.

Under Section 80QQB of the IT Act, literary artists can avail deductions on royalties. It is essential to keep abreast of the latest taxation laws and provisions to maximise deductions and minimise tax burden.

Update for 2025:
Under Section 80QQB, literary and musical artists can now claim royalty deductions up to ₹5 lakh per year, increased from ₹3 lakh, provided they are resident individuals and the work is not related to textbooks for schools or colleges

Tax Deducted at Source (TDS):

TDS refers to the amount deducted and withheld by your Clients before they pay you your fee. This amount is paid to the government on your behalf as part of your income tax and is a legal requirement for all Organisations / Companies / Institutions to do so as a compliance. Individuals normally do not deduct TDS before paying you, except for in certain cases such as RENT paid over 50,000/- but that does not concern your artist income.

Simply put, it’s just a way for the government to track your income and ensure they receive their share of your taxable income. Your Chartered Accountant (CA) will tally all the TDS withheld against your income and offset it against your Final income tax payable. This will reduce your taxable income at year end so remember to collect those TDS certificates (Form16A) on time and ensure you get the benefit of all the TDS deducted.

Update for 2025:
Under Section 194J, the ₹30,000 threshold still applies for TDS on professional services. However, digital platforms and aggregators (like YouTube, Spotify, or influencer agencies) are now required to deduct TDS even below that threshold if they are acting on behalf of registered companies.

Royalty Income Taxation:

Royalty income, a significant revenue stream for artists and creative professionals, is subject to special tax rates. The latest amendment to the Finance Bill, 2023, introduced a reduced taxation rate of 20% on royalty income, recognising its unique nature and contribution to the creative industry.
Under the revised structure, royalty income from various sources, including music, literary works, patents, trademarks, and franchises, is taxed at the preferential rate of 20%.

In 2025 Royalty income continues to be taxed at a preferential rate of 20%, under Section 115A for non-resident artists and applicable provisions for residents.

Deductions under Section 80QQB of the IT Act further enhance tax benefits for recipients of royalty income. Accurate reporting and compliance with tax laws are essential for individuals or entities receiving royalty income to avoid penalties and ensure transparency in taxation.

“Section 80QQB deductions (up to ₹5 lakh) apply to literary, artistic, and musical works. Ensure royalty contracts clearly define whether you’re transferring or licensing rights, as tax treatment may vary.”

Income from Foreign Sources

Foreign income, such as royalties from international releases or digital content monetised abroad, may be taxable in India based on your residency status.

India’s Double Taxation Avoidance Agreements (DTAAs) with several countries allow you to avoid paying tax twice on the same income. If foreign tax has been deducted, you may claim Foreign Tax Credit (FTC) in India.

Update for 2025:
To claim FTC, Form 67 must be submitted on or before 30th November of the assessment year, along with supporting documents (foreign tax receipts and returns).

Indirect Tax Implications for Artists and Creative Professionals

Goods and Services Tax (GST):

The introduction of GST in 2017 brought significant changes to the indirect tax landscape, impacting various sectors, including the music industry. GST is levied at different rates on goods and services, with specific implications for artists and creative professionals.
Musical instruments are subject to varying GST rates, with higher rates applicable to western instruments compared to handcrafted Indian instruments. Additionally, CDs, tapes, DVDs, USBs, sound recorders, amplifiers, and sound reproducers attract GST at different rates.

Live music concerts, dance performances, and theatre shows are subject to GST based on ticket prices. Events with ticket prices below Rs. 250/- are exempt from GST, while events with higher ticket prices are taxed at 12% or 18%, depending on the ticket price range.
Small event organisers have the option to avail composition schemes and pay GST at a flat rate of 1% -6% of their turnover. Input tax credit is available for event organisers, except those under the composition taxpayer scheme.

Artists and musicians who cross 20 Lakhs in Revenue per annum must register and charge GST using valid invoice formats and record the same, collecting and filing as required by Law. Adding to the complexity is the requirement for interstate supply of services, where artists working in multiple states would need to register for GST even if their revenue is under the 20 lakh bracket.

When supplying service or selling product within the state – CGST & SGST is applicable while IGST is applicable for Interstate supply or goods and services.

• Musical instruments: Indian handcrafted instruments attract 12% GST, while most western/electronic instruments attract 18%.
• Media storage (CDs, USBs, etc.): GST between 12%–18%.
• Live performances:
• Ticket price < ₹250: Exempt
• ₹251–₹999: 12%
• ₹1,000 and above: 18%

Clarification for 2025:
There is no change to the GST registration threshold. It remains at:

• ₹20 lakh for most states
• ₹10 lakh for special category states (e.g., northeastern states, Himachal Pradesh)

However, you must register for GST:

• If you provide services across state lines (interstate supply)
• If you provide services through online platforms or aggregators
• If you export digital services overseas (however you can apply GST at zero under LUT- Letter of Undertaking)

Composition schemes are available for small event organisers but disallow input tax credit (ITC).

You must include SAC (Services Accounting Code) or HSN codes in your GST invoices depending on the nature of the product or service.

Folk and Classical Art GST Exemption

As per Notification No. 12/2017-Central Tax (Rate), artists performing in folk or classical art forms (music, dance, or theatre) are exempt from GST if the fee per performance is under ₹1.5 lakh.

Clarified in 2025:
This exemption does not apply to:

• Modern or western forms (including pop, EDM, hip-hop, etc.)
• Brand ambassador performances or commercial advertising engagements

Most contemporary performers will continue to charge 18% GST.

Speak to your Chartered Accountant (CA) for a better understanding and to stay compliant. 

In Conclusion

Navigating taxation for artists and creative professionals in India requires a comprehensive understanding of both direct and indirect tax structures. From income tax, royalty treatment, and deductions to GST compliance, it’s crucial to stay informed and being compliant is paramount. 

Proper record-keeping, accurate reporting, and compliance with the laws are essential for artists and creative professionals to optimise their financial management and minimise tax liabilities. 

Consulting with experienced professionals or chartered accountants specialising in financial management for creative fields can provide invaluable guidance and support in navigating the intricacies of taxation, allowing artists to focus on their creative endeavours while managing their tax obligations effectively.

Key Takeaways:

• Maintain records of all income and deductible expenses.
• Regularly collect and reconcile TDS certificates.
• Register for GST if you provide interstate or digital services.
• Use proper SAC/HSN codes in invoices.
• Claim applicable deductions under Section 80QQB and FTC for foreign income.

Engage a tax advisor familiar with creative industry finances to ensure full compliance and focus on your artistic pursuits.

2025 Updates (Reverified & Final):