12 January 2022
Dear Expert ! My client is running Restaurant and sell through Swiggy, Zomato etc. Being E commerce operation they deduct 1% TDS u/s 194O from payment after adjustment of their Commission /Service charges etc. Is it necessary to deduct TDS by Restaurant u/s 194H for their Commission ?
11 July 2024
Yes, it is necessary for the restaurant to deduct TDS (Tax Deducted at Source) under Section 194H for the commission or service charges paid to Swiggy, Zomato, or any other aggregator platform. Here’s why:
### Section 194H Overview:
- **Section 194H** of the Income Tax Act, 1961 pertains to TDS on commission or brokerage payments. It applies when a person (in this case, the restaurant) pays any commission or brokerage exceeding Rs. 15,000 in a financial year to any person (Swiggy, Zomato, etc.).
### Applicability to Restaurants:
1. **Nature of Payment:** - The payments made by the restaurant to Swiggy, Zomato, or other aggregator platforms typically qualify as commission or brokerage payments because these platforms facilitate sales and charge a commission or service fee for their services.
2. **TDS Rate:** - The TDS rate under Section 194H is 5%. This TDS is to be deducted at the time of credit of such income to the account of the payee or at the time of payment, whichever is earlier.
3. **Threshold Limit:** - TDS under Section 194H is applicable if the aggregate amount of commission or brokerage paid or credited during the financial year exceeds Rs. 15,000.
### Conclusion:
Considering the transactions between the restaurant and aggregator platforms like Swiggy and Zomato involve payment of commission or service charges that qualify as commission under Section 194H, the restaurant is indeed required to deduct TDS at the rate of 5% on such payments. This ensures compliance with the TDS provisions laid down by the Income Tax Act.
Therefore, the restaurant should deduct TDS under Section 194H on the commission or service charges paid to Swiggy, Zomato, or any other aggregator platform, and subsequently deposit the TDS amount to the government treasury within the prescribed timelines. It's essential to maintain proper records and compliance to avoid any penalties or repercussions during audits or scrutiny by the tax authorities.
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