7 things you should know if you deal with Amazon, Flipkart, Snapdeal or any other online portal:

If you are selling goods through Amazon, Flipkart, Snapdeal or any other online website, then this podcast is for you. We shall discuss seven point which you need to know if you deal online. For the sake of simplicity, we shall use a common name “Amazon” for all online platforms.

1. First Point - GST Registration: You must know that GST Registration is Compulsory if you are selling goods on any online portal irrespective of your turnover. So, even if you are selling goods worth Rs. 100/- through Amazon, you need to get yourself registered under GST.

2. Second Point - TDS Deduction: So, if you are selling goods through Amazon, it will charge you certain amount. It may be commission, listing fee and so on. You get monthly invoices from Amazon. What you need to do is determine the nature of such expense. If it is in the nature of commission, you need to deduct TDS at the rate of 5%. If it is a contract, you will deduct TDS @ 2%.

After deduction, you need to pay TDS to the Government by 7th of next month.

In every quarter, you need to file TDS Return and include these online expenses on the PAN of the Amazon. Once you file TDS Return, TDS Certificate will be generated. You need to issue digitally signed TDS certificates to Amazon to get the refund of TDS paid by you.

3. Third Point - Input Tax Credit: You will see that Amazon has charged GST on their commission invoices. You get credit of such GST. The same will be reflected in your GSTR-2B and you need to take ITC of such GST in your monthly GSTR-3B Return. This will reduce your monthly GST liability. This credit will be set off against your GST payable on Sales.

4. Fourth Point - TCS under GST: When you receive payment from Amazon, you will see that there are certain deductions made by Amazon. One of the deduction is 1% under GST Law. What is that 1%? It is called TCS under GST Law. Is it a loss to you? The answer is No. You need to take credit of such TCS by filing TCS Return on GST Portal. After filing TCS Return, that 1% amount will be added to your GST Electronic Cash Ledger. You can utilise it for your GST payments.

5. Fifth Point - TDS Credit: Another deduction by Amazon in your payment is 1% under Income Tax Law. It is called TDS u/s 194-O of the Income Tax Act 1961. Again, this is not a loss to you. It is as good as your advance income tax. When you file your annual Income Tax Return, you need to claim this TDS. This will reduce your Income Tax Liability. You need to ensure that this 1% TDS is reflected in your form 26AS.

6. Sixth Point - Cross Charge under GST: If you supply goods to other states, you are required to be registered in each state from where you make supply of goods. Further, you need to make sure that you follow “Cross Charge” provisions under GST. If you fail to do so, there are serious implications for the same.

7. Seventh Point - Equalisation Levy: If you are purchasing goods from a Non-resident E-commerce operator, equalisation levy @ 2% applies on such transaction.

These were few of the legal provisions you need to comply with. This will maximise your profit and improve your cashflows.

Let us summarise the seven points:

1. GST Registration

2. TDS Deduction on Online Expenses

3. Input Tax Credit of GST on Online Expenses

4. TCS under GST

5. TDS u/s 194-O of the Income Tax Act

6. Cross Charge under GST

7. Equalisation Levy

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Thank you

Link to Purchase the E-Book:

https://www.amazon.in/dp/B098DH1Y57

Current Promotional Price for a limited period: INR 99.00/-

What is the Book about?

It is a short commentary on International Taxation. It covers basics and practical aspects of the subject.

Who should read this Book?

 A Chartered Accountant in Practice

 A Chartered Accountant in Industry

 A Chartered Accountant of any country other than India

 A Professional including CS, CWA, CMA, Lawyers

 An Indian having business outside India

 A person outside India having business in India

 Any person having cross-border transactions

 Any person wishing to enter the Indian Market

 NRIs

 Foreign Nationals

 MNCs and their Team

 A student of a professional course having interest in the subject

 Any person having a liking for the subject

“Gone are the days of tax planning after implementation of BEPS Measures in the MLI Era”, I heard these words in a speech by an official from the Income Tax Department.

I thought for a while and exchanged smiling glance with my friend. A smile which indicated that tax planning is in the blood of a chartered accountant. A smile that conveyed more tax planning is about to happen than ever.

There is a thin line between tax planning, tax avoidance and tax evasion. However today there can be one more concept called artificial avoidance. It lies somewhere between tax avoidance and tax evasion. The multi-national enterprises have been structuring their affairs in such a way to avoid taxes using various methods. We shall discuss some of them in my first book titled “Catch me if you can!”.

These tax avoidance strategies are not legal. They invite penalties and prosecutions. The intention is just to discuss the practical aspect of the loopholes used to avoid taxes.

Simply speaking, tax avoidance can be done only in two ways. Either reduce the income or claim excess deduction. Interestingly, tax planning under international tax is all about using fifteen scenarios in different permutations and combinations. Most of it revolves around creating a substance in a transaction. The Book will give you a glimpse of it. The Book will also cover importance of FEMA and Indirect Tax aspects while structuring a transaction. Initial chapters are from India perspective but overall concepts in the Book apply universally.

I hope you enjoy reading the Book.

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This podcast is applicable to you only if your turnover in the preceding financial year was more than 10 Crores or if you are dealing with a person whose turnover in the preceding financial year was more than 10 Crores. So, if this is your first year of business, this section will not apply to you as there was no turnover in the preceding financial year.

A new section 194Q has been inserted in the Income Tax Act 1961 by the Finance Act 2021.

The Heading of the section is “Deduction of tax at source on payment of certain sum for purchase of goods”. In simple words, you need to deduct TDS on your purchases.

This section is Effective from 01/07/2021.

So, this section applies if you are a Buyer whose turnover in preceding financial year was more than 10 Crores.

If You are purchasing Goods from Any Resident Seller Exceeding 50 Lakhs in a year then you need to Deduct TDS @ 0.1% of the purchase value.

The words used here are “a resident seller”. This means if the seller is non-resident, 194Q does not apply. In other words, in case of import of goods, this section will not apply in most of the cases as the seller in that case is mostly a non-resident.

Also, it is clarified by the CBDT that the term “Buyer” will not include a non-resident not having a permanent establishment in India.

It is also clarified that if the Income of the recipient is exempt, one need not deduct TDS or collect TCS on such transaction.

Now, you don’t need to deduct TDS on entire purchase value. You will deduct TDS on an Amount exceeding 50 Lakhs.

Will you consider your transactions for April to June 2021 for fifty lakhs threshold? As per the guidelines of CBDT, the answer is in affirmative.

Also, as per CBDT guidelines, you need not deduct TDS on GST portion. However, if you payment is earlier than the credit, then TDS needs to be deducted on entire payment.

After deducting of TDS, you will Pay the same to Government before 7th of next month.

After payment, you will File Quarterly TDS Return to include this purchase transaction on PAN of the Seller.

After filing of TDS Return, you will get form 16A from TRACES website and you need to Issue the same to the Seller.

Now, an interesting case may arise if any other TDS section applies simultaneously with this new section. What will you do?

The new section is clear. You need to Deduct TDS under that relevant section and not under 194Q.

Another interesting case may arise if any other TCS section applies simultaneously with this new section.

Here also the new section is clear. The relevant TCS section will override this new section and 194Q will not apply.

Now, if you remember, section 206C(1H) was introduced in the last budget wherein TCS is required to be collected on Sale of Goods Transaction.

What if TCS on Sale of Goods applies and TDS on purchase of goods applies on the same transaction?

Here also the new section is clear that you need to comply with 194Q TDS and TCS u/s 206C(1H) will not apply.

It is also clarified by the Guidelines of CBDT that if E-Commerce Operator has deducted TDS u/s 194-O, then you need not apply section 194Q on the same transaction.

Section 206AA & 206AB:

If the Seller does not furnish the PAN or has not filed the ITR for last 2 years, then you need to Deduct TDS @ 5% instead of 0.1%.

You will have to bother about other's taxes because if you do not deduct the TDS, 30% of Purchase Value shall be disallowed.

So primary responsibility to deduct TDS is of the Buyer. If the Buyer does not comply with it, he will be penalized.

Now, What is the responsibility of the Seller in case the Buyer fails to deduct TDS u/s 194Q?

In that case, the seller needs to Comply with 206C(1H)

Hopefully it is for the good of all. Thank you!

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