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Tds on service charges paid on portal sales

Lokesh Kumar Dewangan (Self Employed) (31 Points)

26 December 2013

Hello Professional Colleagues,

Greetings and wishes for a wonderful year ahead.

I have a query with regards to deduction of tax at source for service charges paid to Snapdeal towards portal sales.

My client has effected sales on Snapdeal portal. The process goes like this.

The product is purchased on the Snapdeal website. Snapdeal facilitates the transaction. The goods are despatched from our end and Snapdeal collects the money and remits us after deducting certain fees. This fees is said to be inclusive of service tax which constitutes service charges, handling charges, courier etc. Now the question is whether to treat the amount deducted as commision/service charges and deduct TDS or is there a way out. Your opinion matters.

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9 Replies

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 27 December 2013

In your case,structure is as follows.Ultimate buyer will pay to snapdeal who generally act as a commission agents for you and you are ultimate seller.generally ultimate purchaser need not to deduct T.D.S for his purchase and you are the source for snapdeal agents for commission for rendering services as sales agent,therefore generally you need to deduct T.D.S on commission paid to snapdeal but snapdeal receives transaction amount.so in my opinion what snapdeal should do is.pay you amount net of their commission plus and T.D.S deductible by you on commission i.e if rs100000 is transaction amount and rs 6000 is commission then snapdeal will pay you rs 94600(94000+10% on 6000),but here conflict as you have contract with snapdeal.there is a conclifct between sec194C and 194H but it would be better to deduct u/s 194H(Commission) rather than contract.If you get further clarifications,please intimate me so that i can get my mistakes well.

1 Like

Sparsh (Student) (27 Points)
Replied 07 February 2015

Mr Nuli, in case the tour operator is a foreign one, means a non resident, and the hotel is situated in India which is registered as a company in the IT Records. In this case there is not a written contract between two and the non resident is not aware of the Indian law and he only pays the amount after deducting his commission then what will be the course of action for that hotel? because if he does not deduct TDS then his entire expenditure will be disallowed. so there might be a possibility that the assesee that is the hotel located in India might have to pay that amount from his own pocket. Do u think this would be the solution? Also when he is going to pay TDS from in his own pocket he has to do that with the help of black money because he won't be able to use white money for the same. what do you think should be the solution to this problem?

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 22 February 2015

Legal Solution: In your case, if recepient of commision, upon considering all Income from India(including commission from Hotel), does not exceed maximun amount not chargable to tax and not liable to pay any Income tax as per Indian Income tax then he can apply to A.O in form no.15CA or 15CB. If A.O satisfied then he will issue certificate to non resident. Then upon submittting certificate issued by Assessing officer, you need not to deduct TDS on payment made by Hotel to such Non resident.

or from today onwards, you suggest him to pay including 10% TDS to hotel management so that Legal Implications can be solved.

Sanjay Jain (Proprietor) (37 Points)
Replied 30 June 2015

I have question regarding asked my frnd 1st that snapdeal paid to merchant after deducting his marketing fees and loading charges, In invoice that generated by snapdeal only written that they charge marketing fees and not just like commission. so that i have doubt if they charged as marketing fees then it may possible to consider as advertisement and so it is consider under 194 C. Another sens that they not provide us any technical and professional serivce that's why it is not consider under 194 J and if we treat as agent for sale of goods and they charge commission from us bt as per contract with snapdeal and their invoice clearly shown that they charged marketing fees so, please clear my doubt that i think to consider under 194 c due to just one types of contract and they provide us marketing or can say advertisement.

darshan (PROPRIETOR) (28 Points)
Replied 05 August 2015

-i am a seller in snapdeal
-i do not have a tan number
-snapdeal and flipkart are saying that it is not mandatory to have tan number
-if my commission amount crosses 5000 in a year
-i will get charged for tds or not
-if i get charged for tds , how will i get my tds reimbursement if i do not have a tan number

sachin (service) (21 Points)
Replied 04 February 2016

One question on snapdeal case , how to deduct tds when snapdeal is deducting their mktg fees and remitting us the net selling amount .This holds true for all portal/payment getaways where the ultimate seller has no options of deducting tds.

Siddu Reddy (Accountant) (69 Points)
Replied 23 February 2016

same doubt any bodycan update and clarify or do we have to have clause on TDS on agreement with them regarding.

Rahul (Accounts Manager) (39 Points)
Replied 20 December 2016

Snapdeal has got the exemption certificate for the financial year 2016-17, to reduced rate at 0.5% only. Hence sellers has to deduct the tds on the Montly invoice of comission @ 0.5%.

Janhit main jaarii..!!!

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 14 February 2017

Snap deal provide slot for us to advertise our product on their site. This is like renting a place. Indeed they also provide liasion services. Hence we can consider it as Contract for provision of services u/s.194C instead of 194H commission. To address problem of T.D.S deduction process, seller has to intimate and insist for payment of total sale amount after deduction of their Marketing fee and loading carges and incliusive of T.D.S.

For e.g. If Sale amount is 1000 and theri fee (Exclusive of S.T) was 20 then T.D.S amount shall be 0.4 (20 X 2%) then Amount to be remitted to seller by snapdeal shall be 1000-20+0.4 = 980.4 and you will deposit 0.4 in the name of snap deal