MYCLOTH INDIA ARMY : TAX, WITHHOLDING & PAYMENT POLICY

 

MYCLOTH INDIA ARMY LONG-TERM SOCIAL MEDIA ACCOUNT OWNER & BRAND PARTNER PROGRAM

OFFICIAL TAX, WITHHOLDING & PAYMENT POLICY

Commercial Model: 10% LOYALTY ANNUAL NET PROFIT SHARE
Brand: MYCLOTH INDIA
Official Website: MyCloth.in
Document Type: Official Tax, Withholding & Payment Policy
Version: 1.0
Effective Date: 20 September 2026
Last Updated: 20 September 2026

1. PURPOSE

This Policy establishes the main rules governing:

  • tax treatment;

  • withholding;

  • payment processing;

  • participant payment information;

  • payment timing;

  • statutory deductions;

  • payment records; and

  • reconciliation of amounts payable under the MYCLOTH INDIA ARMY.

Its purpose is simple:

CORRECT CALCULATION → CORRECT TAX TREATMENT → CORRECT WITHHOLDING → CORRECT PAYMENT → CORRECT RECORDS

This Policy does not repeat the Program's financial formula, attribution methodology, PCF methodology, advertising rules or fraud rules.

2. DOCUMENT RELATIONSHIP

This Policy operates together with the other Program documents.

Document Main Function
Master Terms & Conditions Overall Program framework
Accounting Policy ADNP, APP, ACS, TACS and allocation
PCF Policy Product contribution methodology
Attribution & Tracking Policy Attribution and qualifying activity
Advertising & Content Policy Participant communication
Fraud & Integrity Policy Fraud and artificial activity
Privacy & Data Protection Policy Personal-data handling
Participant Agreement Participant-specific contractual terms
This Policy Tax, withholding and payment

Where a participant-specific definitive agreement contains applicable payment provisions, the applicable order-of-precedence provisions shall apply.

Mandatory tax and statutory law always prevails.

3. IMPORTANT TAX PRINCIPLE

An amount calculated under the Program is a contractual commercial amount.

Its tax treatment is determined by:

  • the legal character of the payment;

  • the recipient's status;

  • applicable tax law;

  • applicable rules and notifications;

  • the timing of payment or credit;

  • required documentation;

  • applicable withholding provisions; and

  • other relevant facts.

The Program name “10% LOYALTY ANNUAL NET PROFIT SHARE” does not, by itself, determine the statutory tax classification of a payment.

The Company shall apply the legally applicable treatment rather than relying solely on the commercial name of the payment.

4. NO TAX GUARANTEE

MyCloth India does not guarantee:

  • that a payment will be tax-free;

  • a particular tax rate;

  • a particular withholding rate;

  • a particular tax classification;

  • a particular net amount after tax; or

  • a particular tax outcome for a participant.

Participants remain responsible for obtaining their own tax advice where necessary.

5. DETERMINATION OF THE GROSS AMOUNT

The financial amount payable to an eligible participant is first determined under the applicable Program methodology.

The general structure remains:

ADNP → APP → QNR → PCF → ACS → TACS → INDIVIDUAL PARTNER SHARE

The resulting contractual allocation may then be subject to:

  • tax withholding;

  • statutory deductions;

  • payment adjustments;

  • lawful recovery;

  • reconciliation; or

  • other legally required adjustments.

The Accounting Policy governs the underlying financial calculation.

6. TAX WITHHOLDING

Where applicable law requires MyCloth India or the responsible payer to deduct tax at source, the required amount may be withheld from the payment.

The participant will receive the amount remaining after applicable lawful deductions.

Example

If:

Gross contractual allocation = ₹1,00,000

and a legally applicable withholding obligation requires a deduction of ₹X:

Net payment = ₹1,00,000 − ₹X

The example is illustrative only.

The actual withholding rate and amount will depend on the law applicable to the specific payment.

7. APPLICABLE LAW AT THE TIME OF PAYMENT OR CREDIT

Tax withholding shall be determined according to the law applicable to the relevant payment or credit event.

For transactions governed from 1 April 2026 onward, the Income-tax Department states that the Income-tax Act, 2025 applies to relevant TDS obligations, with the applicable provisions and tables determining the treatment of specified payments.

Accordingly, the Company shall use the law and reporting framework applicable to the relevant tax period rather than automatically applying historical section numbers or rates.

8. RECIPIENT INFORMATION

A participant may be required to provide information reasonably necessary for payment and tax compliance, including:

  • legal name;

  • PAN or other tax identification;

  • address;

  • country of tax residence where relevant;

  • bank/payment information;

  • tax status;

  • applicable declarations;

  • supporting documentation; and

  • other information legally required.

Failure to provide required information may delay payment or result in withholding or other lawful treatment required by applicable law.

9. PAN AND TAX IDENTIFICATION

Where PAN or another tax identification number is legally required, the participant must provide accurate information.

The Company may verify submitted information where reasonably necessary.

A participant must not provide:

  • another person's PAN;

  • false tax information;

  • altered documents; or

  • misleading declarations.

Incorrect tax information may result in payment delay, additional withholding where required, correction procedures or other lawful consequences.

10. BANK AND PAYMENT INFORMATION

Participants must provide accurate payment information where payment is due.

Depending on the payment method, this may include:

  • account holder name;

  • bank account number;

  • IFSC or equivalent;

  • bank name;

  • payment address;

  • beneficiary information; or

  • other required payment details.

The Company is not responsible for a payment failure caused by materially incorrect information supplied by the participant, subject to applicable law and the Company's reasonable obligations.

11. PAYMENT METHOD

Payments may be made through an approved payment method selected or communicated by MyCloth India.

Where reasonably required, the Company may use:

  • bank transfer;

  • approved payment service;

  • another lawful electronic payment method; or

  • another payment method expressly agreed in writing.

Cash payment is not required and may not be available.

12. PAYMENT TIMING

A participant's allocation does not necessarily become immediately payable when a provisional calculation is made.

Payment may require completion of:

  1. annual accounting;

  2. attribution reconciliation;

  3. fraud/integrity review;

  4. returns/refunds/chargeback adjustments;

  5. accounting corrections;

  6. tax determination;

  7. withholding processing;

  8. participant verification;

  9. payment-information verification; and

  10. other required statutory or contractual procedures.

The definitive payment date or payment window applicable to a participant should be determined under the participant's agreement and applicable Program schedule.

13. PROVISIONAL VS FINAL AMOUNT

A preliminary or estimated amount is not necessarily the final payable amount.

A final amount may change because of:

  • accounting corrections;

  • returns;

  • refunds;

  • chargebacks;

  • invalid attribution;

  • fraud findings;

  • contribution adjustments;

  • tax treatment;

  • withholding;

  • payment corrections; or

  • other lawful reconciliation.

The Company should identify a calculation as provisional where it has not yet been finalized.

14. TAX DEDUCTION DOES NOT REDUCE THE UNDERLYING FORMULA

A tax withholding deduction does not change the underlying Program formula.

The distinction is:

Program calculation : 

ADNP → APP → ACS/TACS → Individual Allocation

Payment calculation : 

Individual Allocation → Applicable Withholding/Deductions → Net Payment

Therefore, tax withholding is a payment/compliance adjustment and not a change to the participant's calculated contribution score.

15. STATUTORY COMPLIANCE

MyCloth India may deduct, report, deposit or otherwise administer taxes and statutory amounts where required by law.

This may include obligations concerning:

  • tax deducted at source;

  • tax reporting;

  • payment records;

  • statutory statements;

  • certificates or equivalent documentation;

  • government reporting;

  • accounting records; and

  • other legally required compliance.

The applicable statutory framework may change over time.

16. TAX DOCUMENTS AND CERTIFICATES

Where applicable, the Company may provide or make available legally required tax documentation relating to amounts paid or tax withheld.

The participant should retain such documentation for their own records and tax filing requirements.

The availability, form and timing of documentation will depend on applicable law and the relevant payment.

17. PARTICIPANT'S OWN TAX OBLIGATION

A participant may have tax obligations in addition to any withholding performed by MyCloth India.

Depending on the participant's circumstances, the participant may be responsible for:

  • reporting the income;

  • filing applicable tax returns;

  • paying additional tax;

  • advance/self-assessment tax where applicable;

  • maintaining records;

  • complying with GST or other applicable indirect-tax requirements where applicable; and

  • obtaining professional tax advice where necessary.

Withholding by the Company does not automatically discharge every tax obligation of the participant.

18. GST AND INDIRECT TAXES

The contractual relationship does not by itself determine whether GST or another indirect tax applies.

Where applicable, treatment may depend on:

  • the legal nature of the supply;

  • participant status;

  • registration status;

  • place of supply;

  • consideration;

  • applicable exemptions;

  • threshold rules; and

  • prevailing law.

Where a participant is required to issue a tax invoice or otherwise comply with applicable indirect-tax requirements, the participant remains responsible for doing so.

The Company may request relevant documentation where reasonably required.

19. INTERNATIONAL PARTICIPANTS

Where a participant is located or tax-resident outside India, additional rules may apply.

These may include:

  • tax-residency requirements;

  • non-resident withholding;

  • treaty considerations;

  • foreign tax documentation;

  • exchange-control requirements;

  • bank requirements;

  • payment-provider requirements; and

  • other applicable legal obligations.

The Company may request appropriate documentation before processing an international payment.

20. CURRENCY AND CONVERSION

Where a payment is required in a currency different from the participant's banking currency, the applicable payment method may involve currency conversion.

The participant may bear or experience:

  • exchange-rate differences;

  • bank charges;

  • intermediary charges;

  • payment-provider fees; or

  • other transaction costs,

where applicable.

The Company will use the agreed or applicable payment method and currency framework.

21. BANK CHARGES

Unless otherwise expressly agreed, third-party bank or payment-provider charges may be treated according to the applicable payment arrangement.

The Company is not responsible for charges imposed independently by a participant's bank or intermediary, except where applicable law requires otherwise.

22. PAYMENT FAILURE

If a payment cannot be completed because of:

  • incorrect bank information;

  • failed verification;

  • account closure;

  • payment-provider rejection;

  • legal restriction;

  • missing tax documentation;

  • compliance concerns; or

  • another payment-processing issue,

the Company may temporarily hold the payment until the issue is resolved.

The participant should provide corrected information promptly.

23. PAYMENT HOLD FOR LEGAL OR COMPLIANCE REASONS

A payment may be temporarily withheld or delayed where reasonably necessary because of:

  • fraud review;

  • identity verification;

  • tax compliance;

  • legal requirements;

  • sanctions or prohibited-payment concerns;

  • disputed entitlement;

  • accounting reconciliation;

  • payment-system requirements; or

  • another lawful compliance reason.

A temporary hold does not by itself establish wrongdoing.

24. OVERPAYMENT OR PAYMENT ERROR

If an amount is paid incorrectly because of:

  • calculation error;

  • duplicate payment;

  • accounting error;

  • technical error;

  • tax correction;

  • later invalidation; or

  • another genuine payment error,

the Company may seek correction or recovery where legally permitted.

The Company should provide reasonable information concerning a material payment correction.

25. LATER TAX OR ACCOUNTING ADJUSTMENTS

Tax or accounting treatment may sometimes require an adjustment after an initial payment.

Where legally or contractually required, the Company may:

  • make a subsequent adjustment;

  • correct future payments;

  • recover an amount lawfully recoverable;

  • issue corrected documentation; or

  • take another lawful corrective measure.

26. NO CASH-BALANCE OR COMPANY-PROFIT GUARANTEE

The existence of a calculated Annual Partner Pool does not mean that each participant has a guaranteed payment.

Payment remains subject to:

  • participant eligibility;

  • final allocation;

  • applicable adjustments;

  • tax/withholding;

  • verification;

  • payment requirements; and

  • the participant's definitive agreement.

The Master Terms expressly state that participation does not create guaranteed income or a guaranteed financial outcome.

27. PAYMENT RECORDS

The Company may maintain records including:

  • participant identity;

  • Participant ID;

  • calculation period;

  • gross allocation;

  • applicable adjustments;

  • withholding;

  • statutory reporting;

  • payment date;

  • payment method;

  • net amount;

  • transaction reference; and

  • relevant reconciliation records.

Such records may also be maintained to satisfy accounting, tax, audit, legal and regulatory requirements.

28. PRIVACY OF PAYMENT INFORMATION

Payment and tax information shall be handled in accordance with the Official Privacy & Data Protection Policy and applicable law.

Participants should not send sensitive banking or tax information through unofficial social-media accounts.

Use official MyCloth India communication channels for payment-related requests.

29. NO UNAUTHORISED PAYMENT COLLECTION

A participant must not:

  • collect MyCloth India customer payments into a personal account;

  • ask customers to pay them for Company products unless expressly authorised;

  • create unauthorised payment links;

  • alter official payment instructions; or

  • represent a personal account as an official Company payment account.

The Master Terms already prohibit participants from collecting Company payments into personal accounts without specific authorisation.

30. PAYMENT AND FRAUD CONTROLS

Payment administration may be subject to the Official Fraud Prevention & Integrity Policy.

Where payment-related fraud, fabricated activity, false information or manipulation is identified, the Company may take the applicable action under that Policy and the participant agreement.

31. PARTICIPANT TAX RESPONSIBILITY

The participant is responsible for understanding their own tax position.

The participant should obtain independent advice where necessary, particularly where they:

  • operate through a business entity;

  • are tax-resident outside India;

  • have GST obligations;

  • receive substantial payments;

  • have multiple income sources; or

  • require specialised tax treatment.

Nothing in this Policy constitutes individual tax advice.

32. NO MANUAL TAX PREFERENCE

An employee, manager or other person administering the Program must not privately promise or alter a participant's tax treatment contrary to applicable law.

Tax treatment should be based on:

APPLICABLE LAW → FACTS → REQUIRED DOCUMENTATION → APPROPRIATE COMPLIANCE

not personal preference.

33. CHANGES IN TAX LAW

Tax laws, rates, thresholds, forms, reporting requirements and statutory procedures may change.

The Company may update the payment process to comply with applicable law.

Where a legal change affects a payment, the legally applicable rule shall prevail even if an older Program document uses different terminology or references.

34. RECORD RETENTION

The Company may retain tax and payment records for the period reasonably required by:

  • tax law;

  • accounting requirements;

  • audit requirements;

  • contractual obligations;

  • dispute resolution;

  • fraud prevention; or

  • other applicable legal requirements.

35. PAYMENT DISPUTES

A participant who believes there is an error in a payment may contact the Company through the official communication channel.

A payment query should, where possible, identify:

  • Participant ID;

  • calculation period;

  • payment reference;

  • amount received;

  • amount believed to be incorrect; and

  • specific issue.

The Company may review the relevant accounting and payment records.

36. SIMPLE PAYMENT FLOW

The Program's payment process can be understood as:

1. VERIFIED PARTICIPATION
↓
2. ATTRIBUTABLE PERFORMANCE
↓
3. QNR + PCF
↓
4. ACS / TACS
↓
5. ADNP + APP
↓
6. INDIVIDUAL ALLOCATION
↓
7. FINAL RECONCILIATION
↓
8. TAX / WITHHOLDING
↓
9. PAYMENT
↓
10. PAYMENT RECORD

37. QUICK REFERENCE

Question Main Rule
Is the 10% automatically paid to every participant? No. It is one collective annual pool.
Is the calculated allocation necessarily the bank amount received? No. Lawful withholding/deductions may apply.
Does the Program name determine tax treatment? No. Applicable law and facts determine treatment.
Can MyCloth India withhold tax when legally required? Yes.
Is withholding the participant's complete tax obligation? Not necessarily.
Can tax rules change? Yes.
Can payment be delayed for verification/compliance? Yes, where reasonably required.
Can an incorrect payment be corrected? Yes, where legally permitted.
Can a participant use a personal account to collect customer payments? Not without specific authorisation.
Does Shopify Collabs determine tax? No.

38. POLICY CHANGES

MyCloth India may update this Policy because of:

  • changes in tax law;

  • regulatory requirements;

  • accounting changes;

  • payment-provider requirements;

  • banking requirements;

  • Program changes; or

  • operational improvements.

Any participant-specific contractual protection that cannot lawfully be changed shall remain protected.

39. NO OVERRIDE OF MANDATORY LAW

Nothing in this Policy is intended to:

  • waive a mandatory tax obligation;

  • guarantee a particular tax treatment;

  • exclude statutory rights;

  • prevent lawful tax recovery;

  • override applicable withholding law; or

  • exclude any liability that cannot legally be excluded.

Applicable law prevails.

40. FINAL PRINCIPLE

The MYCLOTH INDIA ARMY payment system is intended to maintain:

ACCURATE CALCULATION
LAWFUL TAX TREATMENT
CORRECT WITHHOLDING
SECURE PAYMENT
CLEAR RECORDS
RESPONSIBLE COMPLIANCE

The Program's commercial allocation and the participant's final net payment are related but are not the same thing.

MYCLOTH INDIA ARMY

"BUILD WITH US 

GROW WITH US"