TDS ON AMAZON EXPENSES INVOICE

Hi Sumit — this is a very practical and common question for Amazon sellers, especially with regard to TDS compliance on Amazon's monthly expense invoices.

Let’s break it down for clarity:

📌 Summary of Your Case:

Amazon issues a monthly invoice with charges like:
- Listing Fees
- Shipping Charges
- Advertisement Charges
Amazon deducts these from your sales proceeds, and transfers net amount to your bank account.

✅ Is TDS required on these Amazon charges?

Yes, TDS is applicable on some of these charges, based on the nature of service.

Here's the breakup:

Expense Type	Nature of Service	TDS Section	Threshold	Rate
Listing Fees	Professional/technical service	194J	₹30,000 p.a.	10% (if PAN available)
Advertisement Fees	Digital advertising – covered under equalization levy (for NR) OR 194C for domestic	194C or 194J	₹30,000 p.a.	2% or 10%
Shipping Charges	Contract/Logistics	194C	₹30,000 p.a.	2%

✅ Amazon India (Amazon Seller Services Pvt Ltd) is a resident entity, so TDS applies, not equalization levy.

🔍 So why is this tricky?

Amazon does not wait for you to deduct and deposit TDS — they deduct their charges before transferring funds to you.

This creates a reverse calculation scenario — because you are paying TDS on gross value, even though the payment is adjusted.

💡 How to Deduct TDS Practically (Grossing Up):

You need to gross up the amount and deposit TDS on the full invoice value, even though you never actually “paid” it directly.

🔢 Example:

Suppose:
- Ad charges = ₹10,000
- Amazon deducted this from your sales and sent you the balance
TDS @ 10% under Section 194J = ₹1,000
You pay ₹1,000 as TDS to govt, even though you didn’t physically pay ₹10,000 to Amazon.

This is called grossing up — you treat the ₹10,000 as net of TDS.

🧾 Steps to Comply with TDS:

Download monthly expense invoices from Amazon Seller Central.
Categorize the services (Listing, Shipping, Ads, etc.).
Determine applicable TDS section (194C or 194J).
Gross up the expense amount (if TDS wasn't already deducted).
Deposit TDS using Challan 281.
File TDS return (Form 26Q) quarterly.
Issue Form 16A (TDS certificate) to Amazon.

📌 Amazon PAN and address will be on the invoice — use it for TDS return.

❗ What If You Don’t Deduct TDS?

The expense may be disallowed under Section 40(a)(ia) during income tax assessment — meaning higher tax liability.
Also, interest and penalty may apply for non-deduction or late payment of TDS.

✅ Summary:

Question	Answer
Is TDS applicable on Amazon monthly charges?	✅ Yes
On which sections?	194C (shipping), 194J (listing/ads)
How to deduct if Amazon already adjusts it?	Gross up the invoice and pay TDS yourself
Is this mandatory?	✅ Yes, to avoid disallowance and penalties