TDS on Commission for Online Recharge Agents

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  1. RocketInPocket

    RocketInPocket New Member

    Dear Experts,

    I want to leverage your experience and expertise on the subject, so I am doing this audacious effort of reaching your inbox.
    I own an online mobile recharge B2B portal and have some agents working under me. On every mobile recharge they get some fix percentage as commission. For example on recharge of Rs 200/- they get 3% commission, so their account will be deducted with Rs 194/- only.
    So my query is, do I need to deduct TDS on this Rs 6/- commission he earned?
    Please help me in this regard and spare few minutes to resolve my query. Your precious support will help me prove myself a responsible citizen of India.

    Thanks & Regards
     
  2. Amit Sahni

    Amit Sahni Active Member

    In the example above - Rs. 200 would be received by the agent from whom?
     
  3. RocketInPocket

    RocketInPocket New Member


    Sir,

    First of all thanks for your response.
    Here I will try to elaborate the example. I hope it will help you to resolve the query.

    1. First of all my agent deposits some amount, say Rs 10000/- in my bank account and after realization of this amount in my bank account, I increase his virtual balance in his Agent ID on my online recharge portal.
    Now this agent has 10000 in his virtual account and he can do a total recharge of Rs 10000/- in a day/month/year.

    2. Now a customer (mobile user of Airtel, Idea..etc) comes to this agent for recharge of Rs 200/- for his prepaid connection.
    This agent will get this Rs 200 in the form of cash from a customer.
    He will do a recharge of Rs 200 for customer but his own virtual balance will be deducted by Rs 194/- only.

    3.This way he has earned Rs 6 as his commission in this transaction.

    Now I want to know should I deduct any TDS on this commission.

    Thanks & Regards
     
  4. Amit Sahni

    Amit Sahni Active Member

    TDS is required to be deducted only on Payments.

    As you are not paying anything to the Agents - you are not required to deduct the TDS.

    The first rule of TDS is that TDS is required to be deducted by the person making the payment.

    Therefore, you are not required to deduct any TDS
     
    RocketInPocket likes this.
  5. RocketInPocket

    RocketInPocket New Member

    Sir,

    I am just a start up so don't have liability for tax audit u/s44 (don't have much idea about it) but I hope aggregate of commission payment will exceed much more Rs 5000.
     
  6. sai tejesh(ca.final)

    sai tejesh(ca.final) Active Member

    If your turnover exceeds 1cr in the preceeding financial year then you are liable for tax audit u/s 44ab.
    Any way your concern is a new one.so you are not at all liable for deduction of TDS.
     
    Last edited: May 18, 2015
  7. RocketInPocket

    RocketInPocket New Member

    Sir,

    Thanks for your prompt response and solution of my query.

    But I have two doubts left related to Income Tax payment / TDS deduction.

    1. In this case when we are not paying commission to agent. In my understanding it should be my agent's responsibility to declare his income, pay income tax on his income and fill ITR accordingly. Am I Right?

    2.Presently as in the above example transaction of Rs 200/- his virtual account is deducted by Rs 194/- so as you suggested we can not deduct his TDS, because we are not paying anything to him

    But suppose if in above example If we change the process like:
    At the time of recharge of Rs 200/ we deduct Rs 200/- from his virtual account. And increase his virtual account at the month end with Rs 6/- (or the total commission earned in the month).
    Then in that case do we need to deduct the TDS.

    Thanks & Regards
     
  8. Amit Sahni

    Amit Sahni Active Member

    1. Yes, it is the responsibility of the Agent to file his ITR. That is not your responsibility.
    2. In the 2nd case mentioned by you - I'm not sure whether TDS would be applicable or not. However, I'm sure that in the 1st case mentioned by you earlier - you dont have to deduct any TDS from the Agents commission
     
    RocketInPocket likes this.
  9. RocketInPocket

    RocketInPocket New Member

    Thanks a lot Sir!!
     
  10. priyankasuvarna

    priyankasuvarna New Member

    If the turnover is less than 1Crore is it comes under 44D
     
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