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Tds deuction on commision charged by online food delivery platforms

zaiban (accountant) (23 Points)

11 February 2019

Hi,

I have a query regarding commision charged by online food delivery agencies(like food panda, swiggy, zomato).

Suppose that a resaturant has supplied its food through swiggy worth RS 1000 +50(gst 5%)=1050.

Then swiggy deduct its commission say rs 20 as commission and pay Rs 1030(1050-20) to restaurant.

Then how the restaurant will deduct TDS on commission paid (on rs 20) when the restaurant is getting net amount after adjustment of commission.

Kindly resolve the query.

Regards,

Zaiban

Accounts executive

7275006666

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8 Replies

CA Shreyance (Assistant Manager) (22 Points)
Replied 30 May 2019

I think it would be advisable for the restaurant to consider the commission paid (Rs.20) as net of Tax (95% after deducting 5% TDS) and hence the Total commission value would be 21.05 (Rs. 20 - Paid to online food agencies, Rs. 1.05 which is 5% TDS - commission needs to be paid to the government).

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Durgesh Vashisth (Financial Consultant) (252 Points)
Replied 31 May 2019

Mr. Zaiban,

As per Sec 194-H, Income Tax Act, 1961, "commission or brokerage" includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities"

So, its clear through above provision the amount deducted by delivery agencies (Like Food Panda, Zomato etc) are considered as Commission.

Now Question is arising whether TDS provision are applicable on these transaction or not and Second question is arising that what is correct amount of which TDS is deducted.

Section 194H is applicable on these transaction and Rate of TDS will be 5%.

The amount deducted on gross receipt by delivery agencies are considered as a commission and booked as a expenses in Profit & Loss A/c. So deduct TDS Liability will occurred on that Expanses. And provide TDS certificate to Delivery Agencies and Claiming TDS amount from Delivery Agencies which are paid by you (Similar treatment which are done in Case on Interest Paid to Non-Banking NBFC)

Example:- Total receipt of Food sale through Food Panda is Rs.1000/- and amount received after deduction is Rs.900/-.

Commission :- Rs100 (1000-900)

TDS :- Rs5 (100*5%)

Issue TDS certificate of Rs.5/- to Food Panda and Claim this amount.

Thanks & Regards

Durgesh Vashisth

9899812287

1 Like

zaiban (accountant) (23 Points)
Replied 13 November 2019

Sir Thanks for your reply. But i have a question that the invoice of commission given by zomato is suppose rs 100 +18(gst) total 118.

If i consider 100 as net of tax i.e 95 % then totàl commision booked in my books will be 100/95×100=105 + rs19 (Gst) which will not get tallied as per invoice value of zomato.

I am thinking it will be right to deduct tds on rs 100 at 5% ie rs 5 and later take refund from zomato.in this way tha commission invoice and books will also tally

Waiting for your valuable response

Sivaramakumar (GM-ACCOUNTS) (142 Points)
Replied 16 November 2019

Since the remittance is made by swiggy after deducting their commission it amounts to constructive payment made by the hotels. and hence the liability accrued to him on the date of receipt of payment from swiggy. The only option available is to remit the TDS of 5% ( On bill value excluding gst) in your case 5% on Rs.20/ is to be remitted by the hotel and for which you need to get a commission invoice from swiggy for the amount with GST (Rs.20+18% gst). You need to reimburse the TDS paid from your pocket by submitting the TDS certificates to swiggy.

GSt on commission is not subject to TDS.

Hope you are cleared.

Karanveer Matta (7 Points)
Replied 16 July 2020

Hi, I have a query.

Is zomato is deducting TCS 1% from the amount we are liable to receive from them.

Also, we then pay 4% GST to government on food.

Do we have to deduct TDS of zomato. How? Please guide.

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Pratish Nair (2 Points)
Replied 10 October 2023

Even I have a query, if swiggy is already deducting tds from customer then why a delivery partner have to pay weekly tds from his/her hard earned money?

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