As an Amazon seller in India, you focus on growing your business and serving your customers. But are you fully using the tax benefits available to you, such as claiming Tax Deducted at Source (TDS) and Tax Collected at Source (TCS)? Many sellers miss out on these claims and lose money. In this blog, we explain the process, benefits, and key strategies for claiming TDS and TCS on Amazon.in, helping you maximize earnings and simplify tax compliance.
What are TDS and TCS, and Why Should You Care?
Tax Deducted at Source (TDS) is a tax mechanism where a percentage of your income is deducted by Amazon before paying you and is deposited with the government.
Tax Collected at Source (TCS) is the tax Amazon collects from customers and deposits on your behalf when goods or services are sold through the platform.
These taxes are linked to your PAN or GSTIN and can be claimed as credits while filing your Income Tax Return (ITR) or GST return. Failing to claim these credits could lead to higher tax outflows, eating into your hard-earned profits.
Why Amazon Sellers Often Miss Out on Claiming TDS and TCS
- Lack of Awareness: Many sellers don’t know they’re eligible to claim these credits.
- Complexity in Reconciliation: Sellers often struggle to match Amazon reports with their financial records.
- Mismanagement of Documentation: Without proper records, tracking deductions and collections becomes a hassle.
Common Challenges Sellers Face
- Dependence on External Help: Sellers often depend on CAs or service providers to calculate and claim TDS and TCS.
- Time-Consuming Reconciliation: Matching Amazon reports with financial records manually can be tedious.
- Missed Opportunities: Without proper claims, sellers pay more tax than necessary, reducing profitability.
Step-by-Step Guide to Claiming TDS and TCS on Amazon.in
- Understanding the Process
- TDS: Amazon deducts TDS under Section 194-O of the Income Tax Act. The rate is typically 1% on the gross amount credited to your account.
- TCS: Amazon collects TCS at 1% under GST law for taxable supplies made through the platform.
- Downloading TDS and TCS Reports
- Log in to your Amazon Seller Central account.
- Navigate to the Reports section and click on Tax Document Library.
- Download your TDS Certificate and TCS Report for the relevant financial year.
- Filing Your Income Tax Return (ITR)
- Include the TDS amount mentioned in the TDS certificate as part of your taxable income.
- Enter the corresponding TDS credit in the applicable section while filing your ITR.
- Cross-verify TDS details with Form 26AS available on the Income Tax Department’s website.
- Filing Your GST Return
- Log in to the GST portal and select GSTR-2A or GSTR-2B to view auto-populated TCS details.
- Verify these details with your Amazon TCS Report.
- Claim the TCS credit while filing GSTR-3B, ensuring it matches with your sales and tax invoices.
- Maintaining Proper Records
- Keep track of invoices, transaction reports, and Amazon TDS/TCS documents for auditing purposes.
- Use accounting software to automate reconciliation between Amazon reports and your books of accounts.
Why Claiming TDS and TCS Matters
- Reduces Tax Liability:
Claiming TDS and TCS credits lowers your overall tax payable, directly impacting your bottom line. - Prevents Double Taxation:
Without claiming, the same income could be taxed twice, once at source and again at the time of filing your returns. - Improves Cash Flow:
Accurate claims ensure you’re not paying more tax upfront, improving cash flow for business operations. - Boosts Financial Accuracy:
Regularly claiming credits helps in maintaining error-free financial records and compliance. - Avoids Penalties:
Proper tax compliance eliminates the risk of penalties from tax authorities.
Tips for Hassle-Free Claiming of TDS and TCS
- Regularly Reconcile Reports:
Download and review TDS/TCS reports monthly to avoid year-end surprises. - Hire a Tax Professional:
If the process feels overwhelming, consider engaging a chartered accountant to manage claims. - Leverage Technology:
Use accounting tools like Zoho Books, Tally, or QuickBooks for seamless reconciliation and tax filing. - Monitor Form 26AS and GST Portal:
Regularly check for discrepancies between Amazon data and government records. - Understand Applicable Thresholds:
TDS is only deducted if your gross sales exceed ₹5 lakhs annually on Amazon. Be aware of such thresholds.
Common Mistakes to Avoid
- Ignoring Reports:
Not downloading and reviewing TDS/TCS reports can lead to missed claims. - Mismatch in Data:
Failing to reconcile Amazon data with Form 26AS or GSTR-2B can delay claims. - Not Updating GSTIN:
Ensure your GSTIN is correctly updated on Amazon Seller Central to avoid issues with TCS credit. - Late Filing:
Missing deadlines for ITR or GST filing can result in forfeiting eligible credits.
So What is The Solution
Here’s the good news: with FTT MIS by Fast Trade Technologies Private Limited, you can generate detailed reconciliation reports within 2 minutes using just three easy steps. The cost is much less than you’d think, and you can explore the tool with two months of free* reports! You can access the same at: https://efasttrade.com/fttmis/.
How FTT MIS Enhances Your Process
- Time-Saving: Automated reconciliation eliminates hours of manual effort.
- Cost-Effective: Affordable pricing compared to hiring external service providers.
- Comprehensive Reports: Detailed insights on fees, deductions, returns, and refunds.
- User-Friendly: Intuitive interface designed for Amazon sellers.
Conclusion
Claiming TDS and TCS as an Amazon seller goes beyond compliance—it helps you maximize profitability and maintain a financially healthy business. By following the outlined steps and leveraging the benefits, you can simplify your tax processes and focus on growing your business.
If you’re unsure about any step, consult a tax professional or use automation tools to streamline the process. Remember, every unclaimed credit is a missed opportunity to save money!
