TDS & GST on Google or FB Ad words advertisements

All about the TDS & GST on Google or Facebook Ad words advertisements:

• GST @ 18% & TDS @ 2 % can be deducted from the advertising cost of Google Ads.
• If someone wants to publish an advertisement on a digital platform, the first two names that come to mind are Google & Facebook. Google and Facebook, as we all know, are global companies.
• In India, if a company publishes an advertisement on these digital platforms, Google India and Facebook India generate invoices. Tax is deductible on such contributions under section 194C of the Income Tax Act, 1961 (“Act”), according to current Indian tax laws.
• It’s crucial to highlight that some publishers are advertising through a Google corporation based in India, while others are advertising through a Google corporation based outside of India. Regardless of whether they are advertising through a Google entity based outside India or through a Google entity situated in India, GST of 18% & TDS of 2% would apply in both cases.
• Advertisers that publish ads through a Google entity registered outside of India, on the other hand, will incur a slight loss since an equalization fee of 6% (also known as Google Tax) would apply if you promote through a Google entity registered outside of India.
• The GST rate for Google Adwords advertising is 18 percent. This is true whether you are registered with a Google entity registered in India or a Google entity registered outside of India.
• When a payment is made to Google India or Facebook India for online advertisements and tax is deducted from such payment, the deductor must claim a refund of TDS from Google India or Facebook India because, in these cases, the deductor must first deposit the tax into the government’s account out of his own pocket and then claim credit or reimbursement from them.
• Deductors/payers are required to pay the entire bill amount to Google India or Facebook India.

Applicability: TDS on payments made to Google India or Facebook India for Advertisement Expenses.

• Advertisements are published 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 an advertisement is covered by Section 194C. The rules of Section 194C of the Income-tax Act would apply because there is a contract between the advertiser and Google/Facebook.
• Furthermore, a quick review of Section 194C of the Act discloses that any person responsible for paying any sum to any resident for performing any work in pursuance of a contract is required to deduct tax at source. The Act’s Explanation to Section 194C defines the term “work” to include “advertising.”

How is tax deducted from Google or Facebook payments?

• When a person wants to publish his advertisements on digital media, he must first sign up for a Google Adwords account.
• He must choose from a variety of advertising options as well as the payment mode. The payment method is auto-debit type payments using debit or credit cards.
• Every billing period, Google will generate an invoice and deduct the total billed amount from the pre-selected mode of payment (credit card or debit card). The invoice is released to the customer after the payment has been deducted.
• As a result, there is no way to deduct TDS from a payment made by a resident advertiser to Google India, which is also a resident advertiser. Because the amount debited by Google or Facebook is not net of TDS but the gross amount of the bill, there is no scope for TDS to be deducted from such auto payment.
• However, because section 194C of the Income-tax Act requires TDS to be deducted from payments made to a contractor for an advertisement contract, the payment to Google cannot be considered an exception because the amount is auto-debited.
• In such a case, the advertisers have no choice but to pay the TDS amount out of his own pocket to the government account.
• As a result, advertisers are not only paying the gross amount of the bill, but also the tax levied by Google India or Facebook India out of their own pockets.
• Surprisingly, Google and Facebook both support this system. It is a clever way for advertisers to force them to pay their taxes.
• Remember that TDS is a payment of income tax on behalf of the deductee, not a separate levy.
• TDS is paid by the advertisers but not deducted by the advertisers, and the deductors then claim a refund from the deductee.

Google advertising registered with the Indian entity.

• If you are registered with a Google entity in India, they will charge GST at the rate of 18%, which will be noted on the invoice.
• The advertiser can also inform Google of his GST No. and claim GST Benefit of Input Tax Credit by informing Google of his GST No.
• Advertisers who use the monthly invoicing payment settings can notify Google of their GST No. via this link- https://support.google.com/google-ads/contact/billing_none
• All other advertisers can enter their information by going to “Billing & Payments” and then clicking on “Settings” from the left-hand menu.
• You’ll find a section called “India Tax” in your “Payments Profile.” If you enter your GST number here, it will be updated in Google Invoicing Records.

Google advertising registered from the outside India

• Advertisers who use Google Ad words and are registered outside of India must also pay GST at the rate of 18%.
• In this case, Google will not charge 18% GST in the invoice, but the advertiser will be required to pay 18% GST under the Reverse Charge Mechanism.

TDS of 2% on Google Adwords advertisements:

• Aside from the 18 percent GST that must be paid on Google Ads, TDS at 2% will also be deducted. TDS would apply only if a tax audit of the advertiser is performed by a CA.
• Small businesses are not required to perform their tax audits, so compliance with TDS would not apply to small businesses.
• Here it must be noted that GST and TDS are two separate items. GST is collected in accordance with GST Acts, and TDS is deducted in accordance with the Revenue Tax Act.
• In addition, GST is payable in excess of advertising fees, and TDS @ 2% is deducted from Google payments.

This can be explained by an example. For example:  You’re planning to spend Rs 1,00,000 on Adwords for Google. This would apply to GST and TDS as follows.

	Google Ad Expense	Rs. 1,00,000
(Add)	GST @ 18% (18% of Rs. 1 Lakhs)	Rs.    18,000
(Less)	TDS @ 2% (2% of Rs. 1 Lakhs)	Rs.      2,000
	Balance amount payable	Rs. 1,16,000

In most cases, the publisher is only entitled to Rs. 1,16,000 in payment. However, in the case of Google, it states that you pay Rs. 1,18,000 and that once the TDS of Rs. 2,000 is deposited with the government, you will be given a credit of Rs. 2,000.

TDS Deposit with Govt of India

• The TDS of Rs. 2,000 is deducted under Section 194C and must be deposited with the government by the publisher. When this amount is deposited, the advertiser will also include the PAN No. and Google Adwords address, which are as follows.

PAN No:	AACCG0527D
Entity Name:	Google India Pvt Ltd
Address:	No. 3, RMZ Infinity, Tower E Old Madras Road, 4th and 5th Floor Bangalore – 560016

• A TDS Certificate in Form 16A is generated after the TDS is deposited and the TDS Return is filed. The advertiser is required to send this Form 16A to Google via email or courier.
• Advertisers who are billed on a monthly basis must email a digital copy of this Form 16A to collections-in@google.com.
• Advertisers who accept manual or automatic payments must send the Form 16A along with a covering letter mentioning the 10 digit customer id to the following address:

Google India Pvt Ltd,
9th Floor, Building 8, Tower C,
DLF Cyber City, DLF Phase 2,
Gurgaon, Haryana – 122002 India.

The following illustration explains it.

A bill of Rs. 1,00,000/- was raised during a billing cycle for Google advertisements. On the billing cycle end date, the auto payment system debited the billed amount of Rs. 1,00,000/- from the advertiser’s bank account. Because the payment is subject to TDS u/s 194C at 2%, there will be a liability to deposit the TDS of Rs. 2,000/- to the credit of the Central Government by the 7th day of the following month. The advertiser must pay Rs. 2,000 as TDS out of his own pocket. As a result, the advertiser is paying Rs. 1,02,000/- in total for the billed amount of Rs. 1,00,000/-.

Also Read : key features of TCS on goods sale section-206c

What is Google India’s PAN number?

AACCG0527D is Google India Private Limited’s PAN. Its registered office address is given below-

Google India Pvt. Ltd.

No.3, RMZ Infinity, Tower E,

Old Madras Road, 4th & 5th Floor,

Bangalore – 560 016

How to get reimbursement of  TDS from Google India?

However, there is a positive aspect in that the amount of TDS paid by the advertiser is actually reimbursed by Google or Facebook to the advertiser.

• Google’s policy regarding reimbursement of TDS paid by the advertiser is that the advertiser must claim reimbursement of the TDS amount paid by him. Once the advertiser submits a valid claim, the TDS amount will be refunded to the advertiser in the form of credit, which will be used to pay the next billed amount, rather than cash or bank transfer.
• To receive the reimbursement, the advertiser must send the TDS certificates, either digitally signed or a scanned pdf copy of manually signed TDS Certificates, to Google India via email or postal mail at the above-mentioned postal address. Alternatively, such TDS Certificates may be uploaded to this page.

Google India’s Policy on TDS Reimbursement & TDS Certificates:

The following policy is available on the Google portal for reclaiming TDS paid by the advertiser. The policy is reproduced below and is available here.

TDS certificates:

• This applies to Google Workspace editions and other paid subscriptions in your Google Admin console.
• Every quarter, Tax Deducted at the Source (TDS) certificates are required. (More information is available on the website of the Income Tax Department of India.)
• Certificates for the June, September, December, and March quarters must be issued by July 30, October 30, January 30, and May 15, respectively.
• TDS certificates for the previous financial year will not be accepted if they are received after April 30 of the current financial year. For example, all certificates for financial year 2017–18 must be received by April 30, 2018.

Also read : Extention of TDS/TCS statement filing Date

Required to sending TDS Certificate:

• Needed Send a digital copy of the TDS certificate (either electronically signed or a PDF scan of the signed certificate) directly to collections@google.com, if your Google Account uses monthly invoicing.
• If your account is set up for manual or automatic payments, send us the TDS certificate using one of the methods listed below.
• Send us an email with an electronically signed TDS certificate. The credit amount will be added to your account once it has been approved.
• Send a signed hard copy of your TDS certificate, along with a cover letter containing your 10–digit Customer ID, to the address below:

Google India Pvt Ltd.

9th Floor, Building 8, Tower C

DLF Cyber City, DLF Phase 2

Gurgaon, Haryana

122002 India

• After you’ve sent the documents, send us an email with the following information to receive the credit.
• A scanned copy of the TDS certificate (either electronically signed or a PDF scan of signed TDS certificate).
• Delivery receipt information from a courier service.
• Google’s Permanent Account Number (PAN) is AACCG0527D, and the TDS Certificate’s registered address should be:

Google India Pvt Ltd.

No.3, RMZ Infinity, Tower E,

Old Madras Road, 4th & 5th Floor,

Bangalore – 560 016

India

How much TDS is there?

TDS for advertising-related payments to Google India Private Limited is now 2%, excluding Service Tax and education cesses (per Central Board of Direct Taxes, Ministry of Finance, Govt of India Circular No. 1/2014). TDS rates, on the other hand, are subject to vary based on government rules. Please keep in mind that Google Ads cannot provide you with tax advice. Please see a tax adviser if you have any additional inquiries about TDS or other tax problems.

Also Read : New TDS deduction No cash transactions exceeding 1 Crore -Section 194N

How to claim TDS Refund from Facebook India?

• The system for paying the bill, paying TDS out of pocket, and then requesting reimbursement for TDS paid on behalf of Facebook India is the same as for Google India.
• The procedure for claiming TDS reimbursement from Facebook India is nearly identical to that described above for Google India. In the case of Facebook, the advertiser must also submit/upload digitally signed or scanned copies of manually signed TDS certificates in pdf format to their portal.
• The refund is processed after Facebook validates the TDS certificates. Once the refund has been processed, the advertiser will be notified via email.
• As with Google India, the refund will not be credited to the advertiser’s bank account. According to Facebook’s policy, the refund will be in the form of a Facebook ad credit, which will be automatically applied to the advertiser’s ad account. It is also stated that Facebook may take up to two months to validate and process the refund.
• Furthermore, all certificates for the previous financial year must be uploaded by the 31st of October. For example, certificates for fiscal year 2018-19 must be uploaded by October 31, 2019. Facebook will not grant any certificates received after this date.

TDS Reimbursement Policy & TDS Certificates Policy on Facebook India:

For reimbursement of TDS paid by the advertiser, the following policy is stated on the Facebook portal. The policy may be found here and is reprinted below.

TDS Refunds in India:

Advertisers in India who pay for ads with a credit card, debit card, bank account, or manual payment method should read the following information.

• As of 2019, Facebook advertising in India are sold by Facebook India, are invoiced and paid for in Indian rupees, and are subject to GST and TDS (Tax Deducted at Source) (TDS).
• While there are different TDS rates depending on service, the rate for advertising is 2%. (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 with India as their business country.
• GST and TDS are added whenever you are charged for your ads. The amount charged includes TDS, but you must still pay TDS to the government in accordance with local law. If you are an advertiser who lives in a Special Economic Zone (SEZ), you may be eligible for GST exemption from the government.
• To request a refund from Facebook, upload a copy of your TDS certificate here. After you pay Facebook, the government sends you a TDS certificate.

Also read: New revise TDS/TCS due date for filing Return and Payment for the year 2020

Keep in mind the following:

• Facebook may take up to two months to verify and complete the refund. You’ll receive an email once the refund has been processed.
• The refund will be in the form of a Facebook ad credit, which will be automatically added to your ad account after it has been processed. We do not providing invoicing for these ad credits at this time.
• Excess deposits will result in a refund delay or rejection.
• For the previous financial year, all certificates must be submitted by October 31. Certificates for the period 1 April 2018-31 March 2019, for example, must be received by 31 October 2019. Any certificates received after this date will be rejected.
• In order to claim TDS, your GSTIN or PAN must be added to your account. If you have more than one ad account, you must add your GSTIN or PAN to each one.

Note: Facebook cannot provide tax advice. If you have a tax question, we recommend that you contact your tax advisors or local tax authorities.

Ad Spends on entities registered outside of India are subject to a 6% equalization levy:

• In the financial year 2016-17, the Indian government adopted the notion of an equalisation charge, which applies when an Indian advertiser advertises with a non-Indian firm.
• The equalisation levy is 6% and is only required to be paid on advertising expenses made outside of India.
• The most common ad spends outside India are:-
  • Facebook Ads
  • Linkedin Ads
  • Twitter Ads
  • Google Ads if enrolled with Google outside India
• This equalization levy was enacted to encourage international publishers to register in India.
• Because this equalisation fee is only applicable to entities established outside of India, it is preferable for the advertiser to use firms registered in India in order to avoid paying the 6% equalisation charge.
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