GST as a Game Changer for Creator Economy

Abstract

This paper examines how GST shapes India's creator economy where passion meets profession, yet sustainable income remains elusive for most. Through qualitative analysis, it uncovers a paradox: GST legitimizes digital creators while imposing compliance burdens, inverted duty structures, and a threshold effect that discourages growth. Most earn below ₹18,000 monthly, trapped between algorithmic dependency and tax complexity. It recommends simplified compliance tools, shared accounting, and peer learning to transform tax friction into foundation. For India's demographic dividend to flourish through a creator economy, policy must nurture, not merely regulate, this creative revolution.

Keywords: Creator economy, influencers, Goods and Services Tax (GST), GDP, compliance, sustainable growth

1. Introduction

Clicks, shoots, reels and likes are revolutionising this contemporary era. Views are turning into value, followers into markets and content into a career. Digital content creators are transforming imagination into income. This phenomenon is widely recognised as the Creator Economy represents a new frontier of economic opportunity that has the potential of significant contribution to employment and the economy.

In India, millions of creators have redefined the boundaries between passion and profession. Influencers, content creators, and digital marketers are supposed to register for GST if their annual turnover exceeds the threshold limit of ₹20 lakh (or ₹10 lakh for special category states). GST, while designed to bring economic activity into the formal fold, presents a paradoxical barrier to the sustainable growth of the creator economy. The growth of India's creator economy is hindered by a low monetisation rate, high dependency on unpredictable platform algorithms, low domestic CPM rates creating revenue instability, limiting the sector’s overall impact on GDP.

Therefore, with this backdrop, the research paper’s objective is to analyze the role of GST in determining whether this creative revolution can evolve into a structured and sustainable economic force as this sector is expanding. The paper also identifies the challenges hindering the growth of the Creator economy for India’s GDP growth and suggests measures for its sustainable growth.

Thus, the GST framework serves as a policy bridge linking the expanding creator economy to formal economic activity and GDP growth, reflecting India’s gradual transformation from an agrarian base to a modern, service-led, digital economy. With a vast and youthful population, India’s demographic dividend can be effectively leveraged through the creator economy, which provides scalable and accessible employment opportunities for a growing workforce.

DEFINITIONS

According to the BCG Report, the Creator Economy is defined as an “Ecosystem involving creators, platforms, brands, and third-party intermediaries who collaborate and generate revenue through content-driven models such as advertising, sponsorships, subscriptions, commerce, etc.”

Need of the Study

The growing significance of the creator economy calls for a deeper understanding of how it fits into the formal economic system. As digital content creation increasingly contributes to employment and the GDP, it also becomes important to examine its integration with existing tax structures. This study is needed in order to provide a clear perspective on the role of GST in shaping the transition of the creator economy into a structured and sustainable sector.

Statement of the Problem

The creator economy in India is growing very quickly, but it is still part of a system that many people find difficult to understand. Even though GST has helped bring some order and transparency, creators often face problems with registration, tax filing, and following the rules. For many of them, especially small creators, these processes are not very simple. This raises questions about whether GST is really helping the sector grow or making things more complicated. So, it is important to look closely at how GST is affecting creators at different levels.

2.Review of Literature

Biju Thattil, M., & R, R. (2021). Barter, Brands, and The Blind Spot: Taxing India’s Unseen Digital Economy. Indian Journal of Integrated Research in Law: Vol. V (Issue II, pp. 1801–1803) - The study findings revealed that India's tax framework inadequately has addressed the hybrid and non-monetary income of digital creators, leading to valuation, compliance, and enforcement challenges. It recommended tailored guidelines, outreach, and a platform driven measure to bridge the tax gap without stifling digital entrepreneurship.

Dhananjay Kumar Singh and Binod Pratap Singh (Vol. S No6 (2024) Volume S Issue 6 June Part 2 -2024 – ‘GST and Digital Economy: Taxation Challenges of E-Commerce and Online Services’ – This paper emphasised that the introduction of the Goods and Services Tax (GST) in India in 2017 marked a major reform in the country’s indirect taxation system. GST has replaced multiple indirect taxes with a unified tax structure which aimed at improving transparency, reducing tax cascading, and widening the tax base. They argued that GST has also brought online services and digital business activities into the formal taxation framework.

Verma, Anuja. (2025). Taxation of Influencer Marketing: A Grey Zone in Indian Tax Policy. International Journal for Multidisciplinary Research - The study revealed that although existing tax laws in India address influencer income, a lack of clarity in areas such

as income classification, barter valuation, and the treatment of freebies creates a grey zone. Recent measures such as Section 194R indicate progress, but compliance remains complex and may lead to double taxation, especially for the small creators. Compared to other countries, India’s absence of clear guidelines results in uncertainty, disputes, and inefficiencies in taxing influencer marketing.

Piyush Kumarendra. (2025) A Legal Insight Into Brand Deals And Royalties: Decoding The Taxation Of Social Media Earnings. International Journal For Legal Research And Analysis - The study found that social media earnings, including brand deals and freebies, are taxable as a professional income, under Section 194R and GST improving compliance. However, diverse income streams created reporting challenges, while authentic collaborations enhanced the brand loyalty and poor ones damaged it. Overall, tax frameworks are evolving but still struggle to keep pace with the digital economy.

Smith, C. (2025). The taxation of 'Influencers' in South Africa and in an international context. University of Cape Town, Faculty of Commerce, Department of Finance and Tax. – This study is based on a South African context, uses secondary data and the study found that influencers are taxed under existing laws rather than special rules, with treatment depending on their income type and work status. It also highlighted the cross-border challenges like double taxation, proper classification of income and need of clear tax guidance.

3.Research Gap

Previous literature is comprehensive and detailed. These literatures have analysed and depicted the complete picture of the GST framework. It provides the specific GST liabilities and compliance procedures. However the micro and macro-economic impact of this GST framework on the Creator Economy is limited. There is a restricted scope of interconnected systemic barriers to the sustainable growth of the creator economy. This paper aims to fill the gap by adopting qualitative assessment in terms of structural, behavioural and economical impact of the GST regime on the creator economy’s overall contribution to India’s GDP.

4.Objectives

1. To understand the concept of Creator Economy

2. To examine the role of Creator Economy on India’s GDP growth

3. To analyse the impact of GST on the Creator Economy

4. To identify the challenges hindering the growth of the Creator Economy for India’s GDP growth.

5. To suggest measures for better tax compliances and sustainable growth of the Creator Economy.

5.Research Methodology

The study is based on a qualitative review using secondary data from sources like websites, online portals, media platforms, journals, and articles. It also makes use of policy reports, industry data, and some research studies to understand the topic better. Rather than only looking at numbers, the study focuses on common ideas and patterns seen across these sources. This makes it easier to understand the real impact of GST on the creator economy. Overall, the method is descriptive and tries to bring together different views in a simple way.

6.Discussion and Results

The creator economy was at its infancy in 2016-2017 which was just a hobbyist space and then the Covid-19 pandemic opened the doors of creator economy as a professional industry. But today, the Creator Economy has completely revolutionised the economic anatomy. Where creative activities were once suppressed, they are now gaining momentum and transforming into income. Boston Consulting Group's 2025 report "From Content to Commerce: Mapping India's Creator Economy" stated that India has approximately 2.5 million active digital creators with more than thousand followers, out of which 50% are nano and micro influencers. The creator economy has highly impacted the market growth. 30% of consumer purchasing decisions are directly influenced by digital creators. This influence projects to a translation into massive financial figures in the coming years. It is expected to influence over 1 trillion consumer spending by 2030, with direct ecosystem revenues accelerating from $20 - 25 billion in 2024 to $100 - 125 billion by 2030 (BCG analysis, 2025). In 2024, YouTube's ecosystem single-handedly contributed over 16,000 crore to India's GDP and supported more than 9.3 lakh jobs.

Since consumer spending, ecosystem revenues and employment generation are the key components of GDP, this growth directly contributes to the expansion of the Indian economic system. It can be inferred that economic value is no longer created only in traditional factories or offices but also being generated by social media influencers. This highlights a shift towards a more inclusive and accessible economic model. This is not just a passing trend but a revolutionary shift in the economic anatomy of the country.

GST pulled the fragmented sector into the formal economy. This was a foundational shift. It gave a clear legal framework where influencer services were considered as “Supply of Services” which is taxable at 18% GST (Team Bilimoria, 2025). Services in the sense that if an influencer promotes a product, brand or service through posts, videos, stories, or any content, they are providing a marketing service (V, 2026b). Service offered is considered under Online Information and Database Access or Retrieval Services (OIDAR) under the GST law. It is defined under Section 2(17) of the IGST Act, 2017 (Company, 2024). The registration threshold is mandatory if an influencer’s annual turnover exceeds Rs. 20 lakh or Rs. 10 lakh for special category states (Team Bilimoria, 2025). Special category states are Uttarakhand, Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Himachal Pradesh (Tiwari, R. 2024). For a registered influencer, 18% GST must be charged on the services rendered by them. For an unregistered influencer (threshold below Rs. 20 lakh or Rs. 10 lakh in special category states), there is no requirement to charge GST, but the liability shifts to the company hiring them under the Reverse Charge Mechanism. The company can also claim Input Tax Credit (ITC) on this amount (Team Bilimoria, 2025). GST returns includes GSTR-1 for reporting sales (due by 11th), GSTR-3B for summary and tax payment (due by 20th), which can be filed monthly or quarterly, and GSTR-9, a yearly summary which can be filed by 31st December of the next financial year (Taxmann, n.d). A massive win was that it ensured creators keep 100% of their core Intellectual Property (IP) (Agrawal, 2025b). The turnover includes income from brand collaborations, barter collaborations, sponsored content, ad revenue, merchandise sales, affiliate commissions, and consultation fees (V, 2026b)

GST 2.0 simplified compliance in pre-filled returns, faster refunds and automated reconciliations (Agnihotri, 2025b). The new GST reforms aim for faster Input Tax Credit (ITC) processing, allowing creators to get quicker access to the funds for reinvestment. All these provided legal clarity, and also legitimated “influencing” as a profession and a taxable business activity which was just a casual hobby.

7.Challenges

Indian creators often earn $0.50–$2.00 per thousand views, whereas creators in the US and EU may earn $3–$8 for the same content, requiring Indian creators to generate 5–10x more views for equivalent income.

According to BCG report, in India, out of 2.5 million active content creators only about 8-10% of are able to monetise their content effectively. Creators can have millions of views but might still struggle to earn a livable wage, the report stated a large majority of Indian creators earn less than Rs.18,000 per month. This highlights a massive gap between creating content and generating income. The most significant challenge is that creators must continuously keep experimenting, upskilling themselves to keep up with the trend and to unlock new revenue streams. Along with that awareness and knowledge of editing, subscriptions, algorithms, content creation can also act as a barrier to growth. There is also a psychological pressure of sustaining the followers interests by upholding the authenticity.

The compliance efforts might also bring an anxiety of potential audits, book-keeping, incorrect filings or notices that can be distracting and time-consuming. Many creators might also find the necessity to hire accountants that creates a fixed cost, which hits smaller creators hardest. Influencers face an Inverted Duty Structure which means tax on inputs (high-end camera, softwares, lightings, laptops etc) is higher than the tax on output. Another qualitative insight is that tax threshold might create a cliff effect, meaning a disincentive to grow beyond the tax threshold, which is exactly the opposite of what the tax policy should do. Therefore, this leads to deliberately limiting creators income and the economy also loses potential output.

Content creation and monetisation heavily depends on a stable digital infrastructure. Limited internet connectivity and inconsistent network quality in rural and semi-urban areas create

disruptions in uploading content, reach audience, and for real-time engagement, which becomes a significant barrier for the growth of the creator economy.

8.Findings

• Creator economy is a key contributor to employment generation, influencer for consumer spending, an expander of the digital market, viable pathmaker for India’s demographic dividend, all which strengthen the link with GDP.

• The study’s major finding is that out of 2.5 million influencers, only 8-10% monetise their content.

• GST is a mechanism for formalisation and legitimacy of the creator economy.

• However, the process of formalisation introduced compliance related complexities, particularly for small and emerging creators.

• A key finding of the study is the existence of a threshold induced behavioral effect, restricts expansion of not only income but the overall productive capacity of the sector.

• The study also found a significant mismatch between income generation and monetisation efficiency within the creator economic ecosystem.

• The study highlights that participation in the creator economy requires upskilling, basic financial and regulatory awareness.

• Beyond financial implications, the study also identified behavioural and psychological dimension which is the pressure of content authenticity, followers engagement and maintaining GST compliance.

9.Recommendations

• Creator-friendly compliance kits like simple income-expense templates, monthly auto-tracking revenue streams.

• Creator communities can hire one financial expert, or shared accounting services so that cost is split among multiple creators.

• Creator can plan pricing strategically, time major purchases and understand the net income after tax before scaling. Maintain proper invoices to utilise ITC.

• Target higher-paying collaborations, and build niche audiences.

• Short workshops, peer learning groups and creator communities for financial literacy.

• Creators can leverage their own skills in a peer-to-peer network and also for knowledge sharing regarding algorithms, taxation, software tools etc.

• Connectivity-related challenges can be managed through adaptive strategies like optimising content for low-bandwidth environments, scheduling the uploads during stable network periods, using offline editing tools, and leveraging shared digital spaces with reliable internet access.

Conclusion

The creator economy stands as a testament to a new economic era, where ideas are assets, creativity is income, and individuals themselves become enterprises. It has immense potential of providing an opportunity to younger generations to become self-employed enabling them to generate income independently without relying on employers and other traditional job structures, thereby promoting entrepreneurial thinking at an early stage.

Yet creator economy is a fragile ecosystem. GST pushed this towards a structured system. However, legitimising the creator economy there were also certain compliance burdens and threshold-based disincentives that restricts sustained growth of this sector. The analysis of the creator economy within the framework of GST reveals a set of interconnected structural, economic, and behavioural patterns that define the current state of this emerging sector in India. The study finds that the impact of GST on the creator economy is evolutionary rather than revolutionary. While it lays the groundwork for long-term integration into the formal economy, the immediate effects are characterised by adjustment challenges and learning curves for participants.

The challenges arising from GST are not insurmountable barriers but transitional frictions in the formalisation process. Through improved financial awareness, income diversification, and ecosystem-level collaboration, creators can convert compliance into a structured pathway for sustainable growth. The creator economy can become more sustainable by adapting to formalisation, rather than resisting it.

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