GST & ITR Reporting for YouTuber with US Viewership and Adsense Income

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This discussion clarifies how a UK-based YouTuber earning AdSense income from US viewers should report their earnings for GST and Income Tax (ITR) purposes. The correct approach involves reporting the gross AdSense income in both GST and ITR filings, converting it to INR using the applicable exchange rate. The US withholding tax deducted by YouTube can then be claimed as a foreign tax credit in your Indian tax return.

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15 May 2025 One of my clients is a YouTuber earning income via Google AdSense. He has filed LUT under GST and receives income primarily from viewers in the USA. He has submitted Form W-8BEN, so YouTube deducts 15% US withholding tax on gross earnings.

Example:
MONTHLY AdSense income = $10,000
US withholding tax @15% = $1,500
Net remittance = $8,500 → Credited in INR (e.g., @ Rs.100/$ For simplicity) = Rs. 8,50,000

Doubt: How should this income be reported in ITR & GST returns?

Approach 1 (Which I think is correct):

Report gross income (i.e., $10,000 = Rs. 10,00,000) in GST returns, converted at the RBI reference rate/date of remittance.

Similarly, report gross receipts in ITR and compute net profit accordingly.
Then File Form 67 and claim Foreign tax credit u/s 90 for 15% US tax deducted by youtube.

Approach 2:

Report only net amount received (i.e., Rs. 8,50,000) in both GST & ITR.

Ignore the 15% US tax for Indian reporting.

The goal here is not to claim any refund but to follow the legally correct and compliant approach, just to ensure proper treatment. Kindly advise which approach is correct with respect to Indian GST & Income Tax law.