Hundreds and thousands of people are using Facebook ads for their online and offline business in India but it’s a matter of great surprise/shock that only a few knows about how TDS on FB Ad spend works!
Even I personally know people who spend millions on Ads every month and even they didn’t know that they need to submit TDS on ad spend!
Now, if you also don’t know or have any doubts about TDS, let me tell you crystal clear.
First of all, TDS stands for Tax Deducted at Source.
You need to submit 2% of Ad spend to the Govt. as TDS on monthly basis, be it Facebook, Google, or any other advertisement spend, these all come under this TDS regulation. (wait, it’s currently 1.5% temporarily till March 2021 due to the Covid situation)
but why?
Because, if you don’t do this, you won’t be able to book any Ad spends on Expenses, which means all amount spent on ads will be considered as your profit! which means you will have to pay income tax on that amount which you even don’t have! That’s right, you just read the fact.
And just in case you choose to ignore this, believe me, sooner or later they gonna find out and take much more from you!
but I’m paying GST on Ad Spends!
Don’t get confused with GST, TDS & GST are totally different things, and just because you’re already paying GST on your Ad spending that doesn’t validate the fact that you don’t need to pay TDS.
Many people think this way and this is the wrong way. Very wrong!!
The irony is some most CAs also ignore this thing, no idea why do they do this. CA may tell you it won’t make any issue but believe me, it will.
You need to know the basics of your Business, just because CA is ready to ignore something doesn’t mean that’s right.
Always remember, it’s your trouble in the end.
Keep your books clean and make sure you don’t get in trouble later.
What about Equalisation Levy?
If you’re using FB Ad accounts on which GST is not applicable then you need to pay 6% of the ad spending as an Equalization levy to the Govt.
Again if you miss doing this then you won’t be able to take these expenses as a business expense in your books and so you will have to pay Income tax on that!
Please don’t ask why! this is the law, and, law is the law.
How to take TDS Reimbursement (Refund)?
Technically it’s easy, you just need to go to this Facebook TDS Support page and submit your TDS Form No.16A and facebook will give back those all TDS amount in your Ad account.
But practically, the current issue is, FB is not easily giving that TDS reimbursement (refund), some people are able to take and most not, but vo de ya na de vo alag baat hai, aapko dena hi padega.
I hope it will help some..🙏