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What are the liabilities for TDS and Service Tax for E-commerce firms?

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What are the liabilities for TDS and Service Tax for E-commerce firms?
posted Jun 19, 2017 by Anurag Kashyap

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1 Answer

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Liabilities for Service Tax for E-Commerce firms are :-

Commission they have charged from dealer is their Revenue from operations. Since they have not charged service tax separately it will be assumed that it is inclusive of Service tax.
So if an e-commerce co. charges Rs 100 as commission that means 89 is their net receipt and Rs11 is service tax payable and they'll discharge their Service Tax Liability accordingly

For Trader/Dealer: If the E-Commerce company gives him the Invoice (Monthly/Weekly) for their charges he can book CENVAT (Input credit of Service Tax); If No Invoice is received, he may not be able to get Input credit of this service tax paid due to insufficient supporting evidence.

Liabilities for TDS for E-Commerce firms are :-

As per Indian Income Tax laws, the payer needs to deduct tax at source (withholding tax) while making the payment. But in our case, Its the payee who is deducting his amount and paying us balance, therefore the dealer who has incurred commission expense and received its revenue after deduction of commission has 2 Options:

Option A:
Net of its receipts, ie: say he sold goods worth Rs 10,000/- on which commission was Rs 1000/-)
He can show the revenue after netting of to Rs 9000.00 (Net receipts) [Fundamentally, this is against the principles of accounting] by doing this, He will not have any expense like 'Commission' in his Profit & Loss Account and thus Saved from TDS and its Compliances.

Option B:
Show the revenue of Rs 10,000.00; Show Commission Expense of Rs 1,111.00 (ie: 1000/90%) and Deposit the TDS of Rs 111.00 (Rs1,111 * 10% ) (Assuming TDS Rate to be 10%)

answer Jun 20, 2017 by Mukul Chag