6 Sept 2026 · ECOMCA Team
TDS on Ad Platform Fees and How Reimbursement Filing Works
A brand that spends ₹8 lakh a month on Google Ads and Meta Ads is, in most cases, also expected to deposit tax deducted at source on that spend out of its own funds, separately from the invoice amount the platform has already auto-charged from its card. This is one of the more confusing corners of ecommerce compliance because the deduction does not happen the normal way. It happens after the fact, and then has to be recovered.
Key takeaways
- Advertising and promotion payments to a resident entity, including invoices from platforms such as Google, Meta and Amazon, generally attract tax deduction at source under the provision for payments to contractors, since "advertising" is specifically covered under the definition of "work" for this purpose.
- Because these platforms auto-charge the full invoice value including GST through cards or prepaid balances, the advertiser cannot net off the TDS at the time of payment and has to deposit it separately.
- Some platforms allow advertisers to recover this amount as advertising credit, on production of proof that the tax has actually been deposited and reported. This is a platform commercial practice, not a statutory entitlement, and the process varies by platform and can change.
- TDS is computed on the invoice value excluding GST, where GST is shown separately, following CBDT Circular No. 23/2017 dated 19 July 2017.
- From 1 April 2026, the Income-tax Act, 2025 and the Income-tax Rules, 2026 govern these transactions. This post describes the underlying rule for that period without citing a section number, since the renumbered provision has not been independently verified from a primary source at the time of writing.
Why does TDS apply on ad platform invoices at all
Under the Income-tax Act, 1961, for any period up to 31 March 2026, Section 194C required a person responsible for paying any sum to a resident contractor for carrying out "any work" to deduct tax at source. The Explanation to that section specifically brought "advertising" within the meaning of "work". That is the hook that pulls Google Ads, Meta Ads and Amazon Advertising invoices into TDS, provided the entity raising the invoice is a resident of India for tax purposes.
For Tax Year 2026-27 onward, the same category of payment is governed by the corresponding provision of the Income-tax Act, 2025, read with the Income-tax Rules, 2026 notified on 20 March 2026. The 2025 Act is largely a renumbering and consolidation exercise rather than a change in tax policy, so the underlying logic — tax deduction on payment for advertising work done by a resident service provider — continues to apply. This post does not quote a section number for that period because the specific renumbered section has not been verified against a primary source as of the date below; readers should treat the provision as continuing in substance rather than assume the old 1961 numbering still applies after 31 March 2026.
One point worth separating out clearly: this has nothing to do with Tax Collected at Source under GST, which is a different mechanism entirely, applicable to ecommerce operators collecting tax on supplies made through their platform. TDS on ad spend is an income-tax withholding obligation of the advertiser, not a GST collection obligation of the marketplace.
What rate, and on what value
Under Section 194C of the Income-tax Act, 1961 (applicable up to 31 March 2026), the deduction rate was 1% where the payee is an individual or Hindu Undivided Family, and 2% where the payee is any other person, such as a private limited company. Since Google India Private Limited, and the corresponding Indian entities of Meta and Amazon that typically raise these invoices, are companies, the 2% rate applies in the ordinary course.
The obligation to deduct arose only where a single sum credited or paid exceeded ₹30,000, or where the aggregate of sums credited or paid to that entity during the financial year exceeded ₹1,00,000. Once the aggregate crosses that mark, TDS applies on the full value from that point, not merely on the excess.
On what value is TDS computed? CBDT Circular No. 23/2017 dated 19 July 2017 clarifies that where GST is indicated separately in the invoice, tax has to be deducted on the amount paid or payable without including the GST component. Ad platform invoices in India generally show the GST component separately, so the 2% (or 1%, as applicable) works out on the pre-GST invoice value.
| Item | Position for periods up to 31 March 2026 |
|---|---|
| Governing provision | Section 194C, Income-tax Act, 1961 |
| Rate — payee is a company | 2% of invoice value |
| Rate — payee is individual/HUF | 1% of invoice value |
| Threshold | Single invoice over ₹30,000, or aggregate over ₹1,00,000 in the financial year |
| TDS base | Invoice value excluding GST, where GST is shown separately (CBDT Circular No. 23/2017 dated 19 July 2017) |
| Applicable statement | Quarterly TDS statement for non-salary payments, and Form 16A as the certificate |
Caption: TDS position on advertising and works contract payments up to 31 March 2026. From 1 April 2026, the Income-tax Act, 2025 and Income-tax Rules, 2026 apply; the rate and threshold structure has not been reported as changed, but section and form numbering under the new Act should be independently confirmed before filing.
A separate track exists for payments made directly to a non-resident advertising entity that has no permanent establishment in India. Until 31 March 2025, such payments could attract equalisation levy at 6% under Chapter VIII of the Finance Act, 2016, instead of ordinary TDS. That levy on online advertisement payments was withdrawn with effect from 1 April 2025. Most Indian advertisers today are billed by the resident Indian entity of the platform in any case, which is why Section 194C, rather than the equalisation levy, is the relevant provision for the great majority of Google Ads, Meta Ads and Amazon Advertising accounts run out of India.
Why the advertiser ends up paying it separately
In a normal vendor relationship, a business deducts TDS before releasing payment and pays only the net amount to the vendor. Ad platforms do not work this way. Billing is automated: the card on file, or the prepaid balance, is charged for the full invoice value including GST, without any provision for the advertiser to withhold anything.
The consequence is mechanical. The platform has already received 100% of the invoice value. The advertiser still owes 2% (or 1%) of the pre-GST value to the government as TDS. Since there is no payment left to withhold it from, the advertiser deposits that amount from its own bank account, separately, and only afterward tries to recover it.
How the reimbursement process generally works
Once the advertiser has deposited the TDS and reported it correctly, it holds documentary proof that the tax has actually reached the government, in the deductee's name. Some ad platforms accept this proof and, after verification, credit an equivalent amount back to the advertiser's account as advertising credit rather than cash. This is a commercial accommodation the platform chooses to offer; it is not something the Income-tax Act, 2025 or its predecessor requires the platform to do, and terms can change without notice. Advertisers should check the current process directly through the platform's own billing or support channel before relying on any specific submission format, email address or turnaround time, since these details are platform-controlled and not published in any tax statute.
The documentation that platforms generally ask for, based on how these claims are supported, includes proof of TDS deposit, the TDS certificate once generated, the relevant invoices, and the advertiser's billing account details so the credit can be matched to the correct account. Because the credit is advertising credit and not cash, it should be booked in the accounts as a reduction in future advertising expense or as other income at the time it is actually applied, not as a receivable that offsets the TDS expense on the date of deposit. Treating it as a receivable before the platform has actually confirmed and credited it overstates the books.
A worked example
Assume a D2C brand spends ₹6,00,000 in a quarter on Google Ads, excluding GST, billed by an Indian resident entity of the platform and auto-charged to a corporate card along with 18% GST.
- Invoice value (excluding GST): ₹6,00,000
- GST at 18%: ₹1,08,000
- Total auto-charged to the card: ₹7,08,000
- TDS applicable, since the payee is a company: 2% of ₹6,00,000 = ₹12,000
- Amount the brand deposits separately with the government: ₹12,000
- Net position: the brand has paid ₹7,08,000 to the platform and ₹12,000 to the government, a total of ₹7,20,000, against an invoice value of ₹6,00,000 plus GST
The ₹12,000 is what the brand then seeks to recover from the platform, if the platform's process allows it, once the TDS certificate is available.
What to actually do
A brand running spend across Google Ads, Meta Ads and Amazon Advertising should track, quarter by quarter, the cumulative payment to each billing entity, since the ₹1,00,000 aggregate threshold is measured per deductee per financial year, not per invoice. Once the threshold is crossed, TDS should be deposited using the challan generated on the income tax e-filing portal, the quarterly non-salary TDS statement filed on time, and the TDS certificate downloaded from the TRACES portal once it becomes available. Only after the certificate is in hand does it make sense to approach the platform's support channel with a reimbursement request, and the current documentation list and timelines should be confirmed with the platform directly rather than assumed from past practice.
Where this is unsettled
Two areas deserve a note of caution. First, some practitioners have debated whether payments for programmatic or algorithmically-optimised digital advertising should instead be characterised as fees for technical services, attracting a different provision, rather than a contract "for advertising" under the works contract provision. In practice, the near-universal industry position, including how platforms themselves report these payments, treats ad spend as advertising work, and this post follows that established practice. Second, the exact section numbering under the Income-tax Act, 2025 for the provision corresponding to the old Section 194C has not been independently confirmed from a primary source as of the date below. Advertisers filing TDS statements for Tax Year 2026-27 onward should confirm the current form and section references with their TDS return utility or a professional before filing, rather than relying on the 1961 numbering.
Legal position and date line
Law stated as on 6 September 2026. The position described for Section 194C applies to payments up to 31 March 2026 under the Income-tax Act, 1961. For Tax Year 2026-27 onward, the corresponding obligation continues under the Income-tax Act, 2025 and the Income-tax Rules, 2026, without a confirmed section number cited here. The withdrawal of the 6% equalisation levy on online advertisement, effective 1 April 2025, and CBDT Circular No. 23/2017 dated 19 July 2017 on excluding GST from the TDS base, are both referenced as they stood at the same date.
Frequently asked questions
Does TDS apply on every Google Ads or Meta Ads invoice? Not automatically. TDS applies once a single invoice from that platform entity exceeds ₹30,000, or once the total paid to that entity in the financial year crosses ₹1,00,000. Below both limits, no deduction obligation arises for that period.
Is GST included while calculating TDS on ad spend? No, where GST is shown separately in the invoice. CBDT Circular No. 23/2017 dated 19 July 2017 requires TDS to be computed on the value excluding GST in such cases.
Will the platform always refund the TDS I deposit? Not as a matter of law. Reimbursement as advertising credit is a practice some platforms follow on their own terms, subject to their own documentation and verification process, which can change. It is not a right created by the Income-tax Act.
What if Google or Meta bills me from a non-resident entity instead of an Indian one? Then ordinary TDS under the works contract provision may not be the right analysis, and the position needs separate review, since payments to non-residents raise withholding tax and treaty questions distinct from those covered here. The 6% equalisation levy on online advertisement, which used to apply in some non-resident billing situations, was withdrawn with effect from 1 April 2025.
Which form serves as proof that I have deposited the TDS? Form 16A, downloaded from the TRACES portal after the quarterly TDS statement has been filed and processed, is the standard certificate confirming that the deducted tax has reached the government against the deductee's PAN.
This post is for general information and does not constitute professional advice. It reflects the position of law as on 6 September 2026 and may not account for subsequent amendments, notifications or judicial developments. Tax and regulatory outcomes depend on the specific facts of each case. Readers should obtain advice appropriate to their own circumstances before acting on anything stated here.