Rs 20 Lakh Penalty For Indian Social Media Influencers? Govt Drafts Rules For Social Media Influencers!

The government will soon issue guidelines for social media influencers which would make it compulsory for them to declare their association with the product they endorse.

The Department of Consumer Affairs is involved with this, creating dos and don’ts for them.

What’s the issue?

Social media influencers are those that have large followers on social media platforms like Instagram.

They endorse products after taking payments from the brands.

As part of the endorsement these influencers receive free items from companies and are already subject to pay taxes for receiving them.

So there is a possibility of the Income Tax department getting involved as well.

Tax evasion?

The Central Board of Direct Taxes notified that those who receive benefits will have to pay TDS at the rate of 10 per cent under the new tax rules.

Influencers will be liable to pay 10 per cent TDS if they receive a product like a car, mobile, outfit, cosmetics, etc, and retain the same. 

However, if the product is returned to the company after using the services, it will not fall under Section 194R.

Explicit declaration

As per the proposed guidelines, if social media influencers endorse any brand after taking money they will have to declare their association with that brand.

So they will have to put disclaimers in such endorsement posts.

So anyone who is a social media influencer and pushing any particular brand will now have to come clean.

What the new guidelines may entail

The guidelines might come within the next 15 days. They could include:

• Disclaimer will have to be given for paid promotion
• Celebrities will also be included in the guidelines
• If not implemented, CCPA will take action 
• Rs 10 lakh fine for a first-time violation, Rs 20 lakh for a second time, then Rs 50 lakh fine for continuous violation

It should help the influencers to understand the do’s and don’ts as it will become mandatory for them to make disclosures of paid promotions for any brand.

Menace of fake reviews

The department has completed the process of developing a framework to curb fake reviews posted on e-commerce websites which will also be released shortly.

The Advertising Standards Council of India (ASCI) held a virtual meeting with stakeholders, including e-commerce entities, to discuss the issue of rampant fake reviews on their platforms.

Such reviews deceive consumers into buying inferior or fraudulent online products and services.

Since e-commerce involves a virtual shopping experience without any opportunity to physically view or examine the product, consumers heavily rely on reviews online to see the opinion and experience of users who have already purchased the goods or service.

Transparency

This highlights the potential danger of unregulated online “reviews” which they could very well be paid for.

Consumer Affairs Secretary Rohit Kumar Singh said that there has to be traceability by ensuring the authenticity of the reviewer and the associated liability of the platform.

E-commerce players should also disclose how they choose the ‘most relevant reviews’ for display in a fair and transparent manner.