Accounting treatment

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 August 2014 Dear Sir,

Our Company selling goods through Amazon (online)only. For this we listed our products at their website and get order from customers then we raised our invoice and make accounting entry as Debit Amazon XX and Credit to Sales account XX. Also we get payment from Amazon not from the buyer, while remitting to us, amazon deduct some amounts such as Amazon fees, fixed closing fees etc.

My query is that how we do pass journal entry for such charges and what would be the appropriate accounting head for such charges.
Please reply asap..

Many Thanks.

CA UMESH DULAL

CA UMESH DULAL (Expert)
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18 August 2014 Yes made separate head for amazon fees and charges.

write of the fees and charges as expenses.

CA UMESH DULAL

CA UMESH DULAL (Expert)
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18 August 2014 Yes made separate head for amazon fees and charges.

write of the fees and charges as expenses.

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Querist : Anonymous

Querist : Anonymous (Querist)

18 August 2014 Thank you so much....

Querist : Anonymous

Querist : Anonymous (Querist)

20 August 2014 Is TDS applicable on such commission and fees
deducted by Amazon and under which section?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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14 July 2024 Yes, Tax Deducted at Source (TDS) is applicable on commission and fees deducted by Amazon or any similar platform under certain conditions as per the Income Tax Act, 1961 in India. The applicable section for TDS deduction on commission and fees is typically Section 194H.

### Section 194H - TDS on Commission or Brokerage:

- **Nature of Payment:** Section 194H applies to any payment made by way of commission or brokerage. This includes payments made to agents or intermediaries for facilitating transactions or services.
- **Rate of TDS:** As per current regulations, TDS under Section 194H is deducted at the rate of 5% on the commission or brokerage amount paid or credited during the financial year, exceeding Rs. 15,000 in aggregate.
- **Threshold:** TDS is applicable only if the total amount of commission or brokerage paid or credited to a payee exceeds Rs. 15,000 in a financial year.

### Application to Online Platforms (e.g., Amazon):

- Online platforms like Amazon often deduct commission or fees from payments made to sellers or service providers for facilitating sales or transactions.
- If the commission or fees paid by Amazon to a seller or service provider exceed Rs. 15,000 in a financial year, Amazon is required to deduct TDS at 5% before making the payment.
- The TDS deducted needs to be deposited with the government and the deductee (seller or service provider) is provided with a TDS certificate (Form 16A) as proof of TDS deduction.

### Compliance:

- **Filing TDS Returns:** Amazon or the payer is responsible for filing TDS returns (Form 26Q) and issuing TDS certificates (Form 16A) to the deductees.
- **Claiming Credit:** Deductees can claim credit for the TDS deducted on their income tax return based on the TDS certificate received.

### Conclusion:

For commissions and fees deducted by platforms like Amazon, TDS is applicable under Section 194H if the payment exceeds Rs. 15,000 in a financial year. It's essential for both payers and deductees to comply with TDS provisions to avoid penalties and ensure proper tax filing. If you are a deductee (seller or service provider), ensure you receive Form 16A for TDS deducted, which can be used for claiming credit while filing your income tax return.