What is Tax Deducted at Source (TDS)?

Tax Deducted at Source (TDS) is a method of collecting tax at the source of income. Under this system, tax is deducted by a person (deductor), who is liable to make the payment of specified nature to any other person (deductee) and remit the same into the account of the Central Government.

Why should I claim TDS?

Every person responsible for making any payment which is covered by TDS provisions of Income Tax Act, 1961, shall be responsible to deduct tax at the rates prescribed under the Income Tax Act, 1961.

A seller is liable to pay service fee to Amazon on every sale and according to the provisions of the Act, the seller is liable to deduct TDS on the service fee paid and remit the amount deducted as TDS in the Central government’s account.

Since such service fee paid by the seller is inclusive of the TDS amount, the seller is required to deduct the taxes and deposit the taxes so deducted with the Central government.  Once the taxes are deposited with the Central government, then the sellers can claim for reimbursement of TDS by submitting valid proof i.e, Form 16A (TDS certificate).

The process can be explained by way of an example:

  1. If a seller’s revenue by selling on Amazon India is INR. 100.00.
  2. Amazon charges a 'Fee' of INR. 10.00, in the form of either Referral fee, Closing Fee, or Easy Ship, as may be applicable.
  3. Amazon will deduct the Fee upfront and remit INR 90.00 to the seller account.
  4. In this case, the seller has paid a service fee of INR.10.00 to Amazon.
  5. Ideally, the seller is responsible to deduct TDS at the rates prescribed under the Income Tax Act, 1961. As an example, assuming that TDS rate is 10% on INR. 10.00, the seller will have to deposit Re. 1 (10 x 10% = 1) in the Government account and pay INR 9.00 to the Amazon.
  6. In the above example, wherein Amazon is charging a service fee of INR. 10.00 out of INR. 100.00 and remitting INR. 90.00 to the seller, the amount retained here by Amazon includes the TDS amount as well, i.e., INR. 1.00.
  7. Seller can get this amount (INR. 1.00) refunded once the seller submits the TDS certificate to Amazon. The TDS certificate is a proof that TDS was paid.

How can I claim TDS from Amazon?

You can claim reimbursement of the TDS paid by submitting the relevant TDS certificate with Amazon. You have to contact Amazon Seller Support for reimbursement of the TDS amount and submit a digitally signed PDF copy of Form16A to Amazon and on verification of the mentioned certificate, Amazon will reimburse the TDS amount.

Step 1
Pay the TDS amount to the Central Government on a monthly basis and file the quarterly withholding tax return including TDS amount remitted to Central Government on service fee paid to Amazon and generate Form16A after filing of return.

Step 2
Contact Seller Support and create a case with the subject line: TDS reimbursement.

Step 3
Attach a digitally signed PDF copy of Form16A. Please check and ensure that Form 16A / TDS certificate is eligible and contains Amazon name, address, the amount deducted, and Amazon PAN.

Step 4
Amazon will verify Form 16A and if the claimed amount matches the TDS amount (which is included in the service fee charged) as per Amazon's records, then Amazon will reimburse the amount to your Amazon Seller Account.

Step 5
After successful reimbursement, the refunded amount will be disbursed, in the next settlement payment cycle, into your bank account.

Note: In case of unavailability of digitally signed PDF copy of Form 16A, please provide manually signed with company stamp scanned copy of Form 16A.

What documents are required for claiming TDS?

Only a valid Form16A generated from TRACES and duly signed is acceptable for claiming TDS. Bank challans receipts are not acceptable. Please check and ensure that Form 16A / TDS certificate has Amazon name, address, the amount deducted, and Amazon PAN.

It is necessary that all such information are legible.

Disclaimer:

Important: Please note that the information on this page is provided as a general information and does not constitute tax, legal, or other professional advice and must not be used as such. Please consult your professional adviser(s) if you have any questions regarding the above.