Selling online on any platform need utmost attention towards statutory compliances. If you are selling on Amazon and the provisions of TDS are applicable to your business then here is an update on Tax deduction at lower rates for the financial year 2022-23. Amazon has issued a Lower Deduction Certificate (LDC) for the financial year 2022-23.
Amazon has obtained this Lower deduction certificate from their assessing officer in relation to a particular TAN i.e., LDC is issued based on the TAN of the online seller. It is TAN based specific certificate which means it is not mandatory that all the online sellers on Amazon will be issued a Lower Deduction Certificate (LDC) for the financial year 2022-23.
CPC TDS department will intimate the TAN holder i.e., the online seller about the Lower Deduction Certificate (LDC) for the financial year 2022-23 issued on their respective TAN through SMS and email.
Click Here to know the procedure to download the Lower Deduction Certificate (LDC) for the financial year 2022-23.
Key consideration while applying Lower Deduction Certificate (LDC) for the financial year 2022-23?
Online sellers need to consider the following information for the purpose of deduction of tax at source and for filing their TDS returns/statements for the respective quarters of Financial Year 2022-23:
|1||Certificate Number||The certificate number mentioned under the Lower Deduction Certificate (LDC) for FINANCIAL YEAR 2022-23 will be required while filing the TDS return for the respective quarters. |
It is mandatory to mention the certificate number so that department can verify the lower deduction rate with this certificate.
In cases where the online seller forgot or make some clerical mistake while filing the TDS return, the TAN holder will receive the intimation regarding short deduction/non-deduction of TDS as per the Income tax rates.
In those cases, the rectification of the TDS return/statements is to be filed with the correct certificate number.
|2||PAN||The PAN of the deductor is required while filing the TDS return.|
|3||Section 194C/H||Section 194C is for the payments to contractors/ sub-contractors/ Brokerage commission. |
Online sellers are required to consider the limits under the said section and LDC for the purpose of correct deduction and payment of tax at the source.
|4||Limit (Amount)||This limit or Amount specified under the specific section is the threshold limit to be considered for the respective lower deduction rates. |
The time this limit crosses the LDC, the regular tax rates as specified under the Income Tax will apply.
|5||Certificate Rate||This is the rate to be applied throughout the valid period up to the limit specified under the Lower Deduction Certificate (LDC) for FINANCIAL YEAR 2022-23. |
Thereafter, the regular Income tax rates will be applicable.
|6||Valid from and till date 21st July 2022 – 31st March 2023||This means the Lower Deduction Certificate (LDC) for FINANCIAL YEAR 2022-23 is valid from a specific date to a specific date both dates included. |
Any Tax commission invoices/Credit Notes/ Debit Notes issued before or after the specified time limit will not be considered while calculating the tax at these lower rates.
As stated in the above picture, the following are the TDS rates applicable on the basis of LDC issued by Amazon for the financial year 2022-23. The Limit amount, section, and rates are TAN specific i.e., the illustrated amount is for the knowledge purpose only, online sellers have to consider the details as per LDC issued on their TAN.
|1||2.5%||194H||15,09,524||2.5% TDS will be applicable to the TAN holder up to the limit specified therein. Thereafter, the regular rate i.e., 5% will be applicable in case it exceeds the specified limit.|
|2.||1%||194C||23,96,387||1% TDS will be applicable up to the specified threshold limit as per the LDC. Thereafter, the regular rate of 2% will be applicable for the respective financial year.|