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Query for tds

Amit Kumar (Accountant) (276 Points)

07 November 2013

Dear All,

First I would like tell all off you that we are enganged in e-commerce trading party like home shop 18 they give us order and we deliver the product to customer through their arranged couriers services after all this process they give us payment after deducting shipping charges and commission. Sir please tell me that how we have to deduct the TDS ON which rate

Please give valuable suggestion to solve it.

Thanks in Advance

Amit Kumar

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11 Replies

Rajesh (student) (193 Points)
Replied 07 November 2013

Dear Amit Kumar,

I am not able understand your question?

Please Clarify,

They are giving the payment to you. since you are the service provider to them.

I don't know to whom you have to make payment and deduct TDS.

Kindly clarify me, so will help you answering this question.

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Shivani Mittal (Practice) (425 Points)
Replied 07 November 2013

TDS is deducted by the person making payment (payer) i.e not by the person receiving payment (payee). In your case you seem to b the payee. Hence, you are not liable to deduct tax at source rather home shop 18 has to deduct tax at source while making payment to you.

CA Vichitra Trivedi (CA in Practice Studying LL.B. (Hons)) (171 Points)
Replied 07 November 2013

Home shop 18 is making payment to Mr. Amit Kumar's Company after deducting Shipping Charges & COMMISSION. It amounts to Constructive Payment by Amit Kumar's Company to Home Shop 18. TDS on such Commission is required to be made under section 194H. Refer-Circular No. 619, Dated 04.12.1991.

ca vishal aggarwal (chartered accountant) (57 Points)
Replied 07 November 2013

But how tds will be deducted since commission will retained by Home shop 18.

Is this exception to the rule that tds will be deducted at the time of credit or at the time of payment.Will retaining commission by home shop18 deemed to be payment made by Amit's Co and so tds will be deducted by Amit.v

Please clarify

CA Vichitra Trivedi (CA in Practice Studying LL.B. (Hons)) (171 Points)
Replied 08 November 2013

It would be based on the understanding between Parties. However, kindly note that:- 1. Deduction and deposition of TDS is purely the responsibility of Mr. Amit Kumar's Company. 2. Home Shop 18 will be able to take credit of such TDS. 3. Based on the understanding, amount of TDS may also be remitted by Home Shop 18 to Amit Kumar. OR 4. Amit Kumar's Company may also bear the amount of TDS & deposit TDS by reverse calculations. It is based on the understanding between the party, but in any way, provisions of TDS shall be followed by both the parties.

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Amit Kumar (Accountant) (276 Points)
Replied 08 November 2013

Thanks to all

For reply but one thing is not cleared yet now that they included shipping charges in their commission invoice so i have to deduct tds rate 2% on shipping separately 10% TDS on commission so have to understand how can calculate both separately

Please give suggestion

Thanks in advance

Amit kumar

amit (accountant) (45 Points)
Replied 08 November 2013

i give commission on sale to my party which is selling my products as :

i paid rs 50000(by bank) + 50000(by tds payment from my bank) how i will take entry in my books.

Amit Kumar.

CA Vichitra Trivedi (CA in Practice Studying LL.B. (Hons)) (171 Points)
Replied 08 November 2013

Dear Amit,

Suppose, Sale Value = 1000; Commission = 100 and Shipping Charges = 50. I got from ur query that Sales Value of Rs. 1000/- would be collected by Home Shop18 from customer/Shipping Agent. After deducting Commission & Shipping Charges Home Shop18 will pay ur Company Rs. 850/-. But it will also remit you Rs. 11 additionally in respect of TDS, & this amount will be deposited by you in Govt. Account.

1) Entry of Sale

Home Shop18 A/c Dr. 1000

To Sales A/c 1000

2) Booking of Expenses

Commission A/c Dr. 100

Shipping Charges A/c Dr. 50

To TDS on Commission Payable A/c 10

To TDS on Contract Payable A/c 1

To Home Shop18 A/c 139

3) On receiving Amount from Home Shop18

Bank/Cash A/c Dr. 861

To Home Shop18 A/c 861

4) Deposit of TDS to Govt. Account

TDS on Commission Payable A/c Dr. 10

TDS on Contract Payable A/c Dr. 1

To Bank A/c 11

satish kumar Chauhan (accountant) (344 Points)
Replied 09 November 2013

Mr Amit

I aggred with Mr Vichitra tirvedi but the amount of Commission & shipping charges should be fixed per article or % with an agrrement beetbeen the both parties for the I.tax pupose.