TDS- Tax Deduction at Source is a common mean used globally to collect taxes. Any payment covered under these provisions shall be paid after deducting prescribed percentage. It is a mechanism used the world over to track incomes of individuals and organizations before assessment by deducting a certain amount from their revenue by the payer and depositing it to the government under the relevant nature of payment (salary, commission, rent etc.)
Every seller has to deduct charges such as commission, courier fees etc. and deposit on a timely basis from the amount paid to the government. However, the education about this in the marketplace has been quite low with many of the suppliers being uninformed about this provision. Engaging with a top legal firm can create awareness about this but a common seller does not have this privilege.
This article aims to ease your TDS process with the main online sites like Flipkart, Snapdeal, Amazon etc.
The process followed by Amazon, Snapdeal and Flipkart are very similar to each other. Here it is:
To reduce the burden of Tax Compliance on e-commerce platforms, TDS and TCS provisions were put on hold. But as per a senior government official, the GST is now intricately merged with India’s Economy. To bring India’s shadow indirect economy within the GST ambit TDS and TCS provisions may be imposed from July 1. As per the provisions,
- 1% state GST and 1% central GST will be levied on intrastate supplies of over Rs 2.5 lakh
- Interstate supplies of over Rs 2.5 lakh will attract 2% integrated GST.
TDS and TCS will enable Tax Authorities to monitor transactions easily. E-Commerce companies will now collect 1% TCS on any supply made by an individual seller on their platform. The collected proceeds from the TCS has to deposit with the government within 10th of the next month. The individual seller can later claim ITC via the e-Cash Ledger as collected and reflected by the Operator. The ITC shall be credited by the Government upon matching the suppliers claimed amount with the details furnished by the operator in GSTR-8. GSTR-8 is the online form to be filled by e-commerce companies to claim their TDS and TCS. Read more on the form here.
The steps for claiming TDS are as follows:
- The retailers first request the sellers to pay the TDS to the Government against the commission and other fees charged
- Then sellers are asked to get hold of the form GSTR-8.
- After this, sellers are asked to contact seller support team, create a new case for the reimbursement and attach a scanned copy of form GSTR-8/TDS certificate
- In case of Amazon, sellers need to contact the support team through their panel
- In case of Flipkart, sellers can send the TDS certificate to its team via email or direct mail
- In case of Snapdeal, sellers can click the tab directly on its seller panel and claim TDS refund
- After reviewing the claim, the marketplaces reimburse the TDS amount in the impending payment cycle, if the claim is approved/accurate
Online marketplaces not disbursing the TDS amount on time
The TDS amount that a seller is supposed to get runs into thousands and sometimes lakhs of rupees. This money is crucial to maintaining the working capital balance of every seller’s business. More so, for small sellers who don’t have much money in hand. Therefore, a delay in reimbursing the amount can prove to be detrimental to small vendors’ businesses.
Online marketplaces have billions of funds in their account to absorb losses. But vendors can’t sustain without working capital even for 3 months and hence they are often forced to take loans. Therefore, retailers need to speed up the process so that sellers’ cash flow doesn’t get affected.
What can you do as a seller to ensure your TDS reimbursement?
- Make sure to keep a copy of all your bills at all times.
- Submit all the TDS forms along with the details on time.
- Reach out to your tax advisor and consult on all matters.
- Pay TDS to the government so you can receive your TDS certificate.
- If an online portal delays the payment, don’t give up and make sure to receive your money.