Selling thro flipkart and snapdeal

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Tax Payer (Querist)
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06 November 2014 I am trader in Electronic Goods. I have made a tie up with Online Shopping Sites like Flipkart and Snapdeal for selling my products. After the transactions are done, the online sites raise an Invoice for Marketing Fees, Courier Fees, Online Collection Fees, etc. I have a doubt whether I have to make the payment after deducting TDS? If so what is the rate of TDS as per Income Tax?

Tax Payer

Tax Payer (Querist)
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10 November 2014 Whether it will be considered as Contract Payments or Comission Payments?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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23 July 2025 This is a common and important query for traders selling through e-commerce platforms like Flipkart, Snapdeal, Amazon, etc.

Let’s break it down step-by-step:

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## ✅ **Nature of Payments to Flipkart/Snapdeal**

When you sell goods via these platforms, they charge you for:

* **Commission / Marketplace Fee**
* **Shipping / Courier Charges**
* **Payment Gateway Charges / Collection Fees**
* **Marketing or Listing Fee**

These are treated as **services rendered by the e-commerce platform** to you, the seller.

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## ✅ **TDS Applicability**

Yes, **you are required to deduct TDS** on such payments as per **Income Tax Act, 1961**, if you are liable to tax audit under section 44AB.

Here’s how each component is treated:

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### 🔹 1. **Commission / Marketing Fee**

* **TDS Section**: 194H
* **Rate**: 5%
* **Threshold**: ₹15,000 per year per party
* **Type**: Commission

> Example: Flipkart charges 10% commission on ₹1,00,000 sale = ₹10,000
> → TDS @5% = ₹500 to be deducted

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### 🔹 2. **Courier / Logistics Fee**

* **TDS Section**: 194C (Contract)
* **Rate**:

* 1% (if payment to Individual/HUF)
* 2% (if payment to Company/Firm)
* **Threshold**: ₹30,000 per contract or ₹1,00,000 aggregate in FY

> Flipkart usually outsources delivery to 3rd party, but if you are billed by Flipkart for logistics, then **TDS under 194C** applies.

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### 🔹 3. **Online Collection Fee / Payment Gateway Charges**

* **TDS Section**: **Typically 194H** (if collected by the e-com platform)
* **If through independent payment gateway**: Depends on agreement; often 194H or 194C.

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## ✅ Summary Table

| **Component** | **TDS Section** | **Rate** | **Threshold** |
| -------------------------------- | --------------- | -------- | ---------------------------- |
| Commission / Platform Fees | 194H | 5% | ₹15,000 p.a. |
| Courier / Logistics Fee | 194C | 1%-2% | ₹30K (single) / ₹1L (annual) |
| Payment Gateway / Collection Fee | 194H or 194C | 5% or 2% | Varies |

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## 📌 Important Notes:

1. **If Flipkart/Snapdeal is deducting TDS on your behalf**, no need to deduct again.
2. **TAN is mandatory** for deducting TDS.
3. TDS must be **deposited by the 7th of next month**, and **TDS returns filed quarterly**.
4. You should **issue TDS certificates (Form 16A)** to Flipkart/Snapdeal for deducted amounts.

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## 📘 Reference:

* **Section 194H** – Commission or brokerage
* **Section 194C** – Payment to contractors and sub-contractors
* **Circular No. 715 (1995)** – Clarifies courier and logistics services under 194C

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If you need:

* Sample accounting entries for these payments
* Help with generating Form 16A
* Automating TDS deduction & deposit process

I can help with that too.

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