Question 1

What are arm's length salary ranges for family members in content creation?

Accepted Answer

Market-rate salaries vary by role: Video Editor (Rs 1.8-6 lakh/year), Social Media Manager (Rs 2.4-7.2 lakh/year), Thumbnail Designer (Rs 1.2-4.8 lakh/year), Accountant (Rs 2.4-6 lakh/year), Business Manager (Rs 3.6-12 lakh/year), Content Writer (Rs 1.8-4.8 lakh/year), Personal Assistant (Rs 1.8-4.2 lakh/year). Salaries outside these ranges may trigger scrutiny from tax authorities.

Question 2

Do I need to deduct TDS on salary paid to family members?

Accepted Answer

Yes, if the annual salary exceeds Rs 2.5 lakh (basic exemption limit), you must deduct TDS. You'll need a TAN (Tax Deduction Account Number), file quarterly TDS returns, and issue Form 16 to family members. Failure to deduct TDS can result in disallowance of the expense and penalties. If salary is below Rs 2.5 lakh, no TDS is required.

Question 3

Is it better to operate as a proprietorship or private limited for income splitting?

Accepted Answer

Both have advantages: Proprietorship is simpler with direct income splitting through family salaries. Private Limited allows more formal employment structures and 25% flat corporate tax rate (vs up to 30% individual rate), but requires director salary for yourself which is taxable. For most creators earning Rs 20-50 lakh, proprietorship with family salaries is simpler and equally tax-efficient.

Question 4

How does income splitting reduce my overall tax burden?

Accepted Answer

Income splitting works because of progressive tax slabs. Example: Rs 50 lakh income with 30% tax = Rs 10.5 lakh tax. Split among 4 family members (Rs 12.5L each) = approximately Rs 3-4 lakh total tax. Savings: Rs 6-7 lakh annually! Each person gets their own Rs 3L exemption, Rs 75K standard deduction, and lower slab rates. The key is genuine work performance and arm's length compensation.

Question 5

What compliance requirements must I maintain for family employment?

Accepted Answer

Essential compliance: (1) Written employment contracts with job descriptions, (2) Regular salary payments via bank transfer, (3) TDS deduction and filing if salary > Rs 2.5 lakh, (4) Form 16 issuance by June 15 each year, (5) Maintain timesheets and work records, (6) PF/ESI if applicable (usually not for small setups), (7) Include salary expenses in your ITR. Keep all records for 7 years for audit purposes.

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