On Thursday, Twitter launched Tip Jar, a new feature that allows users to donate money to accounts they support. While the ability to receive tips is currently limited to a select group of creators, journalists, experts, and nonprofits, the company noted in a blog post that anyone who uses Twitter in English can send tips.
On iOS and Android apps, those who are eligible and have enabled Tip Jar will see a new dollar bill icon next to the Follow button. On Android, tips can also be sent via Twitter Spaces. The recipient may enable any of the following payment methods: Bandcamp, Cash App, Patreon, PayPal, or Venmo. The company stated that the ability to receive tips will soon be expanded to more people and languages. Notably, Twitter does not currently charge a fee for these tips.
Twitter acknowledged that users have been using the platform indirectly for a long period of time to receive tips. “We $ee you – sharing your PayPal link after your Tweet goes viral, adding your $Cashtag to your profile so people can support your work, and dropping your Venmo handle on your birthday or whenever you need some extra help,” the company wrote in the blog post. This new feature simplifies the process of transmitting and receiving tips.
Availability and tax implications in India
We are unable to confirm whether any Indian account is currently eligible to receive tips, Indian users can send tips to other accounts if the recipient has enabled Paypal as a payment method. Alternative payment methods such as CashApp and Venmo are not available in India and thus cannot be used for tipping.
In terms of tax implications, Pallav Narang, Chartered Accountant and Partner at CNK RK, told that tips will almost certainly be exempt from GST because the tipper is not exchanging money for a good or service. Rather than that, the tipper is sending it as a token of appreciation or to demonstrate support, which increases the likelihood that it will be treated as a “gift” under India’s Income Tax Act. As such, gifts up to Rs 50,000 are tax exempt in a financial year. However, if the gift exceeds this amount, the entire amount becomes taxable and is added to the recipient’s income and taxed at the recipient’s slab rate.
PayPal privacy issue and other Social Engineering Risks
One issue that Rachel Tobac, CEO of SocialProof Security, immediately brought up was that sending tips via Paypal revealed the address of Tip Sender to the Receiver. This clearly has implications for privacy if the sender does not wish to share such personal information. Tobac recognised that this could be a Paypal issue, but suggested that either Twitter warns tippers about this or Paypal stops sending address details.
Tobac also highlighted additional social engineering risks that could arise as a result of this new feature. “Many payment tools have ATO [account takeover] issues — for example, Venmo requires a “real” phone number, which exposes users to the risk of ATO + sim swap. Increasing social engineering and ATO risk by publicly displaying preferred payment tools/details,” she tweeted.