Section 194O: TDS on Payments made to E-Commerce Participants

CA Piyush Agarwal | Last updated: 30 May 2024

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Quick Summary

Section 194O, introduced in the Union Budget 2020 and effective from 1st October 2020, mandates e-commerce operators to deduct Tax Deducted at Source (TDS) when facilitating sales or services for e-commerce participants. The TDS rate is 1% of the sale amount, deducted at the time of crediting the participant's account or making payment, whichever is earlier. A key exemption exists for resident individuals and HUFs if their total sales don't exceed £5 lakh in a financial year and they provide their PAN or Aadhaar.

Section 194O has been introduced in the Union Budget 2020. According to Section 194O, an e-Commerce operator is required to deduct TDS for facilitating any sale of goods or providing services through an e-Commerce participant. TDS on e-commerce operators under section 194-O is applicable from 1st Oc

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FAQ :

Section 194O requires e-commerce operators to deduct TDS at a rate of 1% on payments made to e-commerce participants for goods or services sold through their platform.

Section 194O became applicable from 1st October 2020.

An e-commerce operator owns, operates, or manages an electronic facility for e-commerce. An e-commerce participant is a person who supplies goods or services through an electronic facility provided by an e-commerce operator.

Yes, an e-commerce operator is not required to deduct TDS for a resident individual or HUF if their gross sales in the previous year do not exceed £5 lakh and they have provided their PAN or Aadhaar.

If an e-commerce participant fails to provide their PAN or Aadhaar, TDS must be deducted at a higher rate of 5% as per Section 206AA.

No, Section 194O only applies to e-commerce participants who are residents of India. No TDS will be deducted if the participant is a non-resident.