GST

*▪️Daily Use Vocabulary Words*

*Sensible -* समझदार

*Literate -* पढ़ा लिखा

*Illiterate -* अनपढ़

*Affection -* स्नेह. प्यार

*Clumsy -* बेढंगा

*Ebullient -* जोशीला

*Indifferent -* उदासीन

*Imperative -* आवश्यक, जरूरी

*Garrulous -* बातूनी

*Celibate -* ब्रह्मचारी

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TDS on Payment Gateway Charges – No Deduction Required u/s 194H

Case: One Mobikwik Systems Ltd. (earlier known as One Mobikwik Systems Pvt. Ltd.) vs. Joint Commissioner of Income Tax (OSD), TDS Circle, Gurgaon
ITAT Delhi
ITA Nos. 7830/Del/2018, 273 & 274/Del/2025
Date of Order: September 2025

1. Background and Facts
A survey under section 133A(2A) was conducted on One Mobikwik Systems Ltd., a company authorized by the RBI to operate a “Stored Value Card Wallet” — an electronic wallet system allowing users to make digital transactions.

Mobikwik used two Payment Gateway (PG) service providers — CC Avenue and Zaaki Payment Services Pvt. Ltd. — to facilitate online payments.

During the survey, the Assessing Officer (AO) observed that Mobikwik had made payments to these PG companies without deducting TDS, and held that the same amounted to commission under section 194H. Consequently, Mobikwik was treated as an assessee in default under sections 201 and 201(1A), and demands were raised for AYs 2015-16 to 2017-18.

The CIT(A) confirmed the AO’s view, holding that a principal–agent relationship existed between Mobikwik and the PGs, thereby attracting TDS under section 194H.

2. Assessee’s Contention

The assessee argued that:
• The relationship with payment gateways is principal-to-principal, not principal-agent.
• The agreements with CC Avenue and Zaaki clearly stipulate that both parties act independently, and there is no element of control, supervision, or fiduciary relationship.
• Payment gateways simply provide a technology platform to facilitate payments, charging a processing fee, not a commission.
• RBI guidelines (March 2020) treat PGs as outsourcing partners, not agents.
• Reliance was placed on:
• CBDT Notification No. 47/2016 dated 17.06.2016, and Notification No. 56/2012 dated 31.12.2012, exempting TDS on certain payment transactions.
• Judicial precedents emphasizing that agency is sine qua non for section 194H, including:
• Ahmadabad Stamp Vendors Association (257 ITR 202, Guj.)
• Bharti Cellular Ltd. v. ACIT (SC)
• MakeMyTrip India Pvt. Ltd. v. PCIT (104 taxmann.com 263, Del HC)
• Corporation Bank v. CIT (Karnataka HC)
• Knowledge Hut Solutions Pvt. Ltd. (ITAT Bangalore)

3. Relevant Legal Principles

Section 194H – “Commission or Brokerage”

TDS is applicable only where there exists:
• A relationship of principal and agent; and
• The payment is commission/brokerage for services rendered on behalf of the principal.

Judicial Interpretation

The Supreme Court in Bharti Cellular Ltd. held:

“The expression ‘acting on behalf of another person’ postulates the existence of a legal relationship of principal and agent… the obligation to deduct TDS u/s 194H arises only when such relationship exists.”

The Delhi High Court in MakeMyTrip India Pvt. Ltd. clarified:

“Payment gateway charges are fees for banking or technical services and not commission, since the gateway merely facilitates the transfer of funds between two principals.”

4. ITAT’s Findings

The Tribunal found substantial merit in the assessee’s submissions, holding that:
• No principal-agent relationship exists between Mobikwik and the PGs.
• The PGs act as independent service providers facilitating electronic fund transfers — not as intermediaries negotiating or transacting on behalf of Mobikwik.
• The deduction of a small fee by PGs before remitting the balance to Mobikwik represents service charges, not commission.
• The CBDT notifications and judicial precedents support the assessee’s position that no TDS is deductible under section 194H on payment gateway charges.

Accordingly, the Tribunal set aside the orders of the lower authorities and directed deletion of the demand raised under sections 201 and 201(1A) for all years in question.

5. Key Extracts from the ITAT’s Observations

“We find sufficient force in the argument of the assessee regarding the non-existence of a principal-agency relationship between the assessee and the payment gateways. The assessee’s case is covered by judicial precedents and CBDT instructions. Hence, the provisions of section 194H read with sections 201 and 201(1A) are not attracted.”

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📰 *MCA Grants Relaxation in Additional Fees for Filing of Annual Returns and Financial Statements for FY 2024-25*

📅*Dated: 17th October 2025*
*🏛️Issued by: Ministry of Corporate Affairs (MCA)*
*📜Circular No.: 06/2025*

*The Ministry of Corporate Affairs (MCA)* has issued General Circular No. *06/2025* providing *relaxation in the payment of additional fees* and extension of time for filing various e-Forms related to annual filings under the Companies Act, 2013.

*As per the circular*, the MCA has revised and deployed new versions of e-Forms — _MGT-7, MGT-7A, AOC-4, AOC-4 CFS, AOC-4 NBFC (Ind AS), AOC-4 CFS NBFC (Ind AS), and AOC-4 (XBRL) — on the MCA-21 Version 3 portal._

*💡Key Highlights:*
*1️⃣Extended Filing Period:*
Companies can file their annual returns and financial statements for FY 2024-25 till 31st December 2025, without payment of any additional fees.
*2️⃣Purpose of Relaxation:*
The relaxation aims to give companies adequate time to get familiarized with the newly deployed e-Forms and filing process, considering multiple requests from stakeholders.
*3️⃣Clarification on Statutory Timelines:*
The circular clearly states that this relaxation does not extend the statutory due dates for holding AGMs as prescribed under the Companies Act, 2013.
_Companies not adhering to such statutory timelines will remain liable for legal action under the provisions of the Act._
*4️⃣Post-Deadline Filings:*
Any filings made after 31st December 2025 will attract normal filing fees and additional fees, as per the Companies (Registration Offices and Fees) Rules, 2014, With Total Additional as Normal.

_This circular, issued with the approval of the Competent Authority, provides much-needed relief to corporates adapting to the new MCA-21 Version 3 system and ensures smoother compliance for the financial year 2024-25._

*✍️ Issued by:*
Dr. Amit Kumar, Deputy Director (Policy), Ministry of Corporate Affairs
⸻

Chowki Dhani…Sonipat

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Happy Diwali 💐💐

Advisory: Update on Enablement Status for Taxpayers for e-Invoicing

16/06/2023

Dear Taxpayers,

It is to inform that as per Notification No. 10/2023 - Central Tax dated 10th May 2023, the threshold for e-Invoicing for B2B transactions has been lowered from 10 crores to 5 crores. This change will be applicable from 1st August 2023.

2. To this effect GSTN has enabled all eligible taxpayers with an Aggregate Annual Turnover (AATO) 5 crores and above as per GSTN records in any preceding financial year for e-Invoicing. These taxpayers are now enabled on all six IRP portals including NIC-IRP for e-Invoice reporting.

3. You can check your enablement status on the e-Invoice portal at https://einvoice.gst.gov.in .

4. It would be in the interest of trade to register and utilize the sandbox testing facility available at the IRP portals. This will help taxpayers to familiarize themselves with the invoice reporting mechanism and ensure a seamless transition to the e-Invoice system.

5. Please note that the enablement status indicated on the e-Invoice portal does not indicate a legal obligation on taxpayers to use e-Invoicing. However, actual liability to generate IRN shall be checked by taxpayers with respect to applicable notification in the light of facts pertaining to them.

6. While the listing of enabled GSTINs is purely based on the turnover criteria reported in GSTR-3B, it is essential for taxpayers to confirm whether they fulfil the conditions outlined in the notification/rules. Thus, it is the legal responsibility of the concerned taxpayer, both buyers and suppliers, to ensure compliance.

7. In case, a taxpayer who is otherwise but not auto enabled on the e-Invoice portal, can self-enable for e-Invoicing using the functionality provided on the portal.

8. GSTN once again emphasises that all eligible taxpayers should familiarize themselves with the e-Invoicing requirements and take the necessary steps to ensure compliance with the new threshold.

Thanking You,
Team GSTN

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