Freelancers & Creators
Affiliate commissions, gifted products and section 194R
Affiliate payouts and the products brands send you are both income. Here is how TDS under 194H and 194R works.
By Meera Krishnan4 min read
For many creators, cash from brands is only part of the picture. There are affiliate commissions trickling in from shopping links, and a steady stream of phones, skincare, gadgets and clothes arriving at the door. Both are taxable. Since 2022, the second one also comes with its own TDS section, 194R, which has made brands far more careful about paperwork. Figures here are for FY 2025-26 (AY 2026-27), with section numbers from the Income-tax Act, 1961.
Affiliate commissions
Commission from an affiliate programme is income from your creator business, taxed at slab rates like the rest of your earnings. Many Indian programmes treat it as commission and deduct TDS under section 194H at 2%, once the commission they pay you crosses ₹20,000 in the year. Some platforms classify it differently, so look at the TDS section printed in your Form 26AS rather than assuming.
Foreign affiliate programmes do not deduct Indian TDS. The income is still taxable in India. Keep the platform’s monthly statements and match them against bank credits, because there will be no 26AS entry to remind you.
Gifted products are income too
When a brand sends you a product to feature and you keep it, you have received a benefit connected to your business. Its fair value is taxable income in your hands, just as a cash fee would be. Section 194R is the enforcement tool: it makes the business giving the benefit responsible for ensuring tax is deducted at 10% of its value, once the total value it gives you crosses ₹20,000 in the year.
Because there is no cash to deduct from, brands usually handle it in one of three ways:
- they deduct the 10% from a cash fee they also pay you for the same campaign
- they ask you to pay the tax yourself as advance tax and send them proof
- they bear the tax themselves and deposit it
Whichever route, the 10% shows up in your 26AS and AIS, and you take credit for it in your return like any other TDS.
What about products you send back?
CBDT guidance says that a product you use for content and then return to the brand is generally not a benefit for 194R. The key is evidence. If you return items, keep the courier receipt or the brand’s acknowledgement. Products that are consumed in the process, such as cosmetics or food, are harder to “return” and are usually treated as kept.
A worked example
Arjun, a tech reviewer, has these items in FY 2025-26:
| Item | Value | TDS |
|---|---|---|
| Affiliate commission (194H, 2%) | ₹1,50,000 | ₹3,000 |
| Phone gifted by Brand A, kept | ₹60,000 | ₹6,000 (194R, 10%) |
| Earbuds from Brand B, kept | ₹12,000 | none (below ₹20,000) |
| Laptop from Brand C, returned | ₹90,000 | none |
Arjun’s income from these items is ₹1,50,000 + ₹60,000 + ₹12,000 = ₹2,22,000. Note that the earbuds are still income even though Brand B had no TDS obligation; the threshold is about who must deduct, not about whether it is taxable. The returned laptop is not counted, provided he can prove the return. His TDS credits total ₹3,000 + ₹6,000 = ₹9,000, which he claims against his tax when he files.
Valuing what you keep
Value is normally the price the brand would charge a customer, which is often what the brand reports. Use the brand’s figure where it is given and the market price where it is not, and record it in a simple register the day the product arrives. Trying to reconstruct values in July from old unboxing videos is miserable.
The GST angle
A product given in exchange for a post can be seen as a barter: your promotional service paid for in kind. If you are GST-registered, that may mean GST on the value of the service. This is an area where the answer depends heavily on the facts and on how the deal is written, so it is worth asking a CA. If you also sell merchandise through an e-commerce marketplace, the marketplace may deduct a separate 0.1% TDS under section 194-O, which you can claim too.
A simple routine
- Keep one sheet: date, brand, item, value, kept or returned, and any TDS mentioned.
- Save emails where brands describe the deal; they show whether a product was a gift or a loan.
- Each quarter, match affiliate and 194R entries in 26AS against your sheet.
- Include gifted products you kept in your business income, and claim every rupee of TDS.
General information, not tax advice. Rules change, so check the latest rules or speak to a CA before you act.