If you are selling on Amazon India, you may notice Tax Deducted at Source (TDS) applied on certain service fees such as advertising or multi-channel fulfillment charges. The good news is that sellers can claim TDS reimbursement from Amazon by submitting proper documentation.
In this complete guide, you will learn:
- What TDS is for Amazon sellers
- Which fees are eligible or exempt
- Why you should claim TDS reimbursement
- Step-by-step process to claim TDS
- Required documents and important tips
This guide is especially useful for Amazon India sellers, ecommerce entrepreneurs, and accountants managing seller accounts.
What is Tax Deducted at Source (TDS)?
Tax Deducted at Source (TDS) is a taxation system under the Income Tax Act, 1961 where tax is deducted at the time of payment instead of later.
In simple words:
- The payer deducts tax before making payment.
- The deducted amount is deposited with the Government of India.
- The recipient receives payment after tax deduction.
For Amazon sellers, TDS may apply when paying certain service fees to Amazon.
Which Amazon Service Fees Are NOT Subject to TDS?
According to CBDT Circular No. 20 (December 28, 2023):
Marketplace-related fees included in gross sales value under Section 194-O are generally not subject to additional TDS.
These may include:
- Listing fees
- Closing fees
- Labeling fees
- Pick and pack fees
- Gift wrap fees
However, TDS may still apply on:
- Advertisement fees
- Multi-Channel Fulfilment (MCF) fees
Always consult a tax professional to confirm applicability.
Example to Understand Amazon TDS Calculation
Let’s assume:
- Total sales revenue: ₹100
- Amazon service fees: ₹30
- Advertising + MCF fees: ₹10
- TDS rate: 2%
TDS payable = ₹10 × 2% = ₹0.20
Since Amazon already deducts fees upfront, the retained amount includes this TDS portion. Once you submit proof (Form 16A), Amazon reimburses the TDS amount.
Why Should Amazon Sellers Claim TDS Reimbursement?
Claiming TDS is important because:
- It is your legal responsibility under the Income Tax Act
- You avoid financial loss due to unrecovered tax
- It improves profit margins
- Ensures proper compliance with tax regulations
- Maintains accurate accounting records
Once you deposit TDS with the government, you can recover the same from Amazon.
Step-by-Step: How to Claim TDS Reimbursement from Amazon
Follow these steps carefully:
Step 1: Deposit TDS to Government
- Pay TDS monthly to the Central Government.
- File quarterly TDS returns.
Step 2: Generate Form 16A
After filing returns, download Form 16A from the TRACES portal.
Step 3: Contact Amazon Seller Support
- Login to Seller Central.
- Create a case with subject: “TDS Reimbursement”.
Step 4: Submit Documents
Attach:
- Digitally signed Form 16A (PDF)
If digital signature is unavailable:
- Submit scanned signed and stamped copy.
Step 5: Amazon Verification
Amazon verifies:
- Seller details
- TDS amount
- PAN information
Step 6: Receive Reimbursement
Once approved:
- Amount is credited to your seller account.
- Payment is transferred during the next settlement cycle.
Documents Required for Amazon TDS Claim
Only one document is accepted:
- Valid Form 16A (from TRACES)
The document must include:
- Amazon name and address
- Amazon PAN
- TDS amount deducted
- Clear and legible details
- Signature (digital or manual with stamp)
× Bank challans are NOT accepted.
Important Tips for Faster Approval
- Ensure PAN details match Amazon records.
- Submit quarterly Form 16A on time.
- Double-check TDS amount before submission.
- Keep proper accounting records.
Common Mistakes Sellers Should Avoid
Many sellers lose reimbursement due to:
- Incorrect PAN number
- Unreadable documents
- Missing Amazon details in Form 16A
- Claiming TDS on non-eligible fees
- Filing incorrect returns
Avoiding these mistakes speeds up reimbursement.
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Disclaimer: This information is provided for general guidance purposes only. Tax laws may change, and applicability depends on individual business situations. Sellers should consult a qualified tax advisor, chartered accountant, or legal professional before making compliance decisions
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