Introduction
TDS stands for Tax Deducted at Source. Hundreds and thousands of people in India use Facebook advertising for their online and offline business, but it is a great surprise that only a few know how TDS works on Facebook Ad spend. If someone wants to put their ad on a digital platform, Google and Facebook are the first two options that spring to mind. Google and Facebook, as we all know, are worldwide corporations.
In India, invoices are issued by Google India and Facebook India if someone posts an advertisement on these digital platforms. Tax is deductible on such contributions under section 194C of the Income Tax Act, 1961 (“Act”), according to current Indian tax laws.
TDS on payments made to Google India or Facebook India for Advertisement Expenses
Advertisements are placed on digital media and payments are paid under a contract of advertisement between the payer/deductor and Google India or Facebook India. Google or Facebook publish advertisements in a variety of digital formats. A contract for advertising is covered under Section 194C. The rules of Section 194C of the Income-tax Act would apply since there is a contract between the advertiser and Google/Facebook.
Facebook advertising in India is now sold by Facebook India as of 2020, billed and charged in Indian rupees, and subject to a Goods and Services Tax (GST) and Tax Deducted at Source (TDS). Although TDS rates vary depending on the service, the advertisement rate is 2 percent (as per a notification issued by the Government of India, for the period of 14 May 2020 until 31 March 2021, the applicable TDS rate for advertising is 1.5 percent). This affects all ad accounts which are set up in India by their business country.
Whenever you’re paying for your ads, GST and TDS are added. The amount paid includes TDS, but as per local law, you’re still expected to pay TDS to the government. If you are an advertiser operating in a Special Economic Zone (SEZ), you may be certified as excluded from GST by the government.
How to make TDS Refund?
Technically, it’s simple to go to this Facebook TDS Support page and upload your TDS Form No.16A, and in your Ad account, Facebook will return all the TDS numbers.
But practically, the current issue is, FB is not easily giving that TDS refund, some people are able to take and most not, but it does not matter if Facebook refunds it or not, one is liable to pay if they are using Facebook ads services.
TDS @ 2% on Google and Facebook Ads
TDS @ 2 percent will also be deducted, apart from the 18 percent GST that is expected to be charged on Google and Facebook Ads. Only if the advertiser is expected to have his tax audit carried out by a Charted Accountant, TDS would be applicable. Small businesses are not expected to carry out their tax audit and this TDS compliance will also not be applicable to small businesses.
It is important to note here that GST and TDS are two different things. GST is levied in accordance with the GST Acts and, in accordance with the Income Tax Act, TDS must be deducted.
In addition, GST is payable over and above the advertising fees, while the payment made to Google or Facebook must be deducted from TDS @ 2 percent.
The following illustration clarifies the subject:
A bill for Rs. 1,00,000/- was raised for advertising broadcast by Google during a billing cycle. On the billing cycle end date, the auto payment system deducted the billed sum of Rs. 1,00,000/- from the advertiser’s bank account. Since the payment is subject to TDS u/s 194C at 2%, there will be a requirement to deposit the TDS of Rs. 2,000/- to the credit of the Central Government by the 7th day of the next month. The advertiser would be responsible for paying the TDS of Rs. 2,000 out of his own money. As a result, the advertiser is paying a total of Rs. 1,02,000/- for the billed amount of Rs. 1,00,000/-.
Sending Tax Deducted at the Source (TDS) certificate
Submit a digital copy of a TDS certificate (either electronically signed or a PDF scan of a signed certificate) directly to collections-in@google.com if your account uses monthly invoicing.
Send a digital copy of the TDS certificate (either electronically signed or a PDF scan of the signed certificate) to Google via email if your account uses manual or automatic payments. It will be credited to your account once the credit sum has been accepted.
Google’s Permanent Account Number (PAN) is AACCG0527D and the registered address on the TDS Certificate should be:
Google India Pvt. Ltd.
No.3, RMZ Infinity, Tower E,
Old Madras Road, 4th & 5th Floor,
Bangalore – 560 016
To claim your refund from Facebook, submit a copy of your TDS certificate on link given on Facebook website. Your TDS certificate is sent by the government after you pay Facebook.