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How to calculate TDS on Flipkart Commission

How to calculate TDS on Flipkart Commission

tds on flipkart commission invoice

In this digitalized economy, transacting business operations in online mode is the need of the hour. These e-commerce marketplaces are providing tremendous scope of doing business in an online mode.

Today in this edition of the e-commerce blog, we are going to understand the commission invoice raised by the “Flipkart”. Insight about how to calculate TDS on Flipkart Commission i.e. TDS liability on such invoices by understanding the different concepts related to Commission Invoices.

how to calculate tds on flipkart commission
By CA Devesh Thakur

As you are well aware that “Flipkart” is an e-commerce operator who is providing a digital platform for doing business operations in an online mode.

Selling on “Flipkart” is one of the best options available to an online seller in India. Flipkart issues monthly commission invoices including credit notes (if any) to their online sellers on which provision of TDS is applicable.

Sellers need to comply those TDS provision if they are applicable to them and necessary action to be taken for TDS on Flipkart Commission Invoices.

Under these commission invoices, there is various head of charges like Shipping fee, Collection fee, commission fee, Fixed fee, Ad services fee, cancellation fee, etc. Broadly these charges are covered under Section 194C, Section 194IB, Section 194J, and Section 194H.

Now let us first understand the nature of expenditure that are to be considered under the relevant provision of TDS.

Fee TypesApplicable TDS SectionStandard TDS Rate *From 1st April 2020 to 13th May 2020TDS rate for *FY 2020-21 w.e.f 14th May 2020
Uninstallation Packaging Fee, Ad Services Fee, Uninstallation Fee, Same Day or Next Day Delivery Fee, Removal Fee, Pick and Pack Fee, Installation Fee, Shipping Fee194C2%1.5%
Storage Fees194IB10%7.5%
Tech Visit Fee, Franchise Fee194J10%7.5%
Fee Discount, Commission Fee, Collection Fee, Fixed Fee, Cancellation Fee, Service Cancellation Fee194H5%3.75%

*these reduced rates are applicable for the financial year 2020-21 only for now as our finance minister has given relief of reduction in the base rate of TDS by 25% under the pandemic situation.

Later on, the standard TDS rates would be applicable from 1st April 2021 if the relief doesn’t get extended.

Section 194C

TDS to be deducted from the Net Adjusted amount i.e. after considering the Credit Note issued by the Flipkart for the respective month.

section 194c tds on payment to contractors
By CA Devesh Thakur

Let us take an example to understand the concept

Suppose, the gross commission charged is Rs.110/-, and Flipkart issued the credit note for the respective month for Rs.10/-. Now the Adjusted amount is Rs.100/-.

TDS is to be deducted on Rs.100/- at the rate of 2% [1.5% from 14.05.2020 to 31.03.2021] as shown in the figure.

Note: amount consider in the example is excluding the GST amount. Therefore, in order to calculate TDS liability, we should not consider the GST/Tax amount.

Section 194IB

Suppose, the gross commission charged is Rs.110/-, and Flipkart issued the credit note for the respective month for Rs.10/-. Now the Adjusted amount is Rs.100/-.

tds section 194IB tds on rent
By CA Devesh Thakur

TDS is to be deducted on Rs.100/- at the rate of 10% [7.5% from 14.05.2020 to 31.03.2021] as shown in the figure.

Note: amount consider in the example is excluding the GST amount. Therefore, in order to calculate TDS liability, we should not consider the GST/Tax amount.

Section 194J

Suppose, the gross commission charged is Rs.200/-, and Flipkart issued the credit note for the respective month for Rs.50/-. Now the Adjusted amount is Rs.150/-.

section 194J tds on fee for professional services

TDS is to be deducted on Rs.150/- at the rate of 10% [7.5% from 14.05.2020 to 31.03.2021] as shown in the figure.

Note: amount consider in the example is excluding the GST amount. Therefore, in order to calculate TDS liability, we should not consider the GST/Tax amount.

Section 194H

Suppose, the gross commission charged is Rs.110/-, and Flipkart issued the credit note for the respective month for Rs.10/-. Now the Adjusted amount is Rs.100/-.

tds u/s 194H tds on commission

TDS is to be deducted on Rs.100/- at the rate of 5% [3.75% from 14.05.2020 to 31.03.2021] as shown in the figure.

Note: amount consider in the example is excluding the GST amount. Therefore, in order to calculate TDS liability, we should not consider the GST/Tax amount.

Now let’s understand the commission invoices/credit notes issued for the respective month.

As shown in the image, Flipkart has issued Commission/Tax Invoice for the month of February 2020 dated 29.02.2020.

flipkart commission invoice
By CA Devesh Thakur

Since it has been issued on the basis of Intrastate business transaction it has charged CGST @9% and SGST @9% on the Net Taxable Value.

This Net Taxable value is to be considered for the purpose of calculation of TDS liability. Rs.1317 will be considered under the TDS section 194C as Service Accounting Code 996812 is covered under section 194C.

Therefore, we can say that the applicable TDS rate on the Shipping fee is 2%. [1.5% from 14.05.2020 to 31.03.2021].

Before calculating the TDS liability under section 194C you should consider the Credit note issued by the Flipkart, as they will reduce our TDS liability.

flipkart credit note
By CA Devesh Thakur

As shown in the image, a Credit note issued under SAC 996812 against the shipping fee is for Rs. 46/-. Now, this amount of credit note has to be adjusted against the original shipping fees i.e. against Rs.1317 and the applicable TDS rate would be charged against such balancing amount.

Flipkart TDS Calculator

Now let us consider the other commission invoice under Flipkart has charged IGST as it is an interstate supply @18%. A service accounting code 998599 is covered under section 194H the applicable TDS rate is 5% [3.75% from 14.05.2020 to 31.03.2021].

flipkart commission/ tax invoice
By CA Devesh Thakur

As far as SAC 998365 is concern it will be covered under section 194C.

Flipkart has issued a credit note against SAC 998599 also, which we need to consider in order to determine the amount on which we need to deduct TDS.

Calculation of TDS u/s 194H

As shown in the figure, the amount of Credit note is adjusted from the amount of fee charges in the original commission/tax invoice.

calculation of tds u/s 194h
By CA Devesh Thakur

After arriving on the net amount we have to apply the applicable TDS rate for determining the amount of TDS payable.

Important Point:

When you are doing the accounting part of the invoices, do not forget to reduce the amount of input tax credit which you have to consider full while accounting for the original invoice.

Therefore, the input tax credit of IGST Rs.182.84 will get reduced by Rs.4.62 and the balance i.e. 178.22 is the eligible input tax credit which is available to you while discharging your GST output liability.

Likewise, in the calculation of TDS u/s 194C we have to first adjust the amount of Credit note in order to determine the amount on which we need to apply the applicable TDS rate.

calculation of tds u/s 194c
By CA Devesh Thakur

Do not forget to reduce your input tax credit as shown in the figure.

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CA Devesh Thakur

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5 COMMENTS

  1. sir kya is per bhi thress hold limit 15000 194h wali relate hogi kya aur baki thresshold limit kya applicable hogi agar ha to kya tds nahi bharna kya

    • Dear Soni,
      Yes, TDS provisions are the same and are applicable to all the deductors irrespective of the deductee. Being a seller if TDS provisions are applicable to your organization then you will have to deduct TDS as per the Income Tax Act or as per the Lower Deduction Certificate provided by the ECO (E-commerce operator). For more detailed information, you can refer to the below link if you are selling online on any e-commerce portal.
      https://youtube.com/playlist?list=PL1o9nc8dxF1ShUNXkAbYrAYj2Pile1Rim

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