When you use Cashfree services including Payment Gateway, Payouts, Marketplace Settlement, etc, Cashfree charges you a monthly amount called as Commission.
The invoice is raised and shows up on your Cashfree Merchant Dashboard on the 5th of the next month, i.e for the services rendered for the period 1st Jan to 31st Jan, Cashfree raises the invoice by 5th of Feb.
However as a business you may be liable to deduct TDS ( Tax Deducted at Source) on the commission so paid and deposit it with the government on behalf of Cashfree.
Amount of TDS
The rate of TDS on commission or brokerage is 5 percent
TDS is calculated on total invoice value excluding the GST amount. CBDT has clarified through Circular No. 23/2017 that if GST on services has been indicated separately in the invoice, then no tax would be deducted on GST component.
There is no additional charge or education cess imposed on payment to residents
For the above sample invoice, the TDS amount shall be 5% of 372652.50.
Q. As per Income tax law in India, we must deduct TDS on the said Invoice amount @ 5%. We have already deducted for the Invoices raised for the month of Sept 19 and Oct 19. How can we get it reimbursed, as full amount has been already paid through our Net banking/Credit Card?
A person responsible to deduct TDS at the rates prescribed under the Income Tax Act of 1961 in relation to receipt of services from Cashfree Payments India Pvt. Ltd (Cashfree), can claim reimbursement of the TDS paid by submitting the relevant TDS certificate with Cashfree.
For more information on the prescribed rates under the Income Tax Act, please reach out to your local tax authorities.
Any amount deposited by you as TDS shall reflect under your form 16A. You need to furnish your form 16A to claim the amount as TDS deposited on behalf of Cashfree.
Steps to submit a reimbursement claim:
1. Pay the TDS amount to the government tax department and generate Form 16A.
NOTE: Only a valid Form 16A generated from the Income Tax TRACES portal and signed by the authorized signatory is acceptable for claiming TDS reimbursement; bank challans receipts are not acceptable.
Please ensure that Form 16A / TDS certificate has the unique certificate number, name and address of the deductee, the amount deducted and the PAN of the deductee, and that all the information is legible.
Please note that the TDS amount must correspond with the initial invoice amount.
2. Send email to Cashfree Finance team at email@example.com, with the subject line "TDS reimbursement", and attach a scanned copy of your Form 16A.
3. Cashfree will verify the submitted documents and will approve or reject the reimbursement of the said amount.
4. If the reimbursement is approved, the refunded amount will be disbursed to you via NEFT.
Please note that the information on this page is provided as general information, and does not constitute tax, legal, or other professional advice, and must not be used as such. Please consult your tax advisor if you have any questions regarding the above.