As proposed in the budget 2020, in The Income-tax Act, a new section 194O that deals with TDS on payment by an e-commerce operator to e-commerce participant has been inserted, namely. TDS u/s 194O is to be paid by an e-commerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform @ 1% at the time of credit of amount of sale or service or both to the account of e-commerce participant or at the time of payment thereof to such participant by any mode, whichever is earlier.
(1) 'Notwithstanding anything to the contrary' contained in any of the provisions of Part B of this Chapter, where 'sale of goods or provision of services' of an e-commerce participant is facilitated 'by an e-commerce operator' through its digital or electronic facility or platform (by whatever name called), 'such e-commerce operator shall:
• at the time of credit of the amount of sale or services or both to the account of an e-commerce participant or
• at the time of payment thereof to such e-commerce participant by any mode, whichever is earlier
deduct TDS @1% on the gross amount of such sales or services or both.
(1) For the purposes of this sub-section, any payment made by a purchaser of goods or recipient of services directly to an e-commerce participant for the sale of goods or provision of services or both, facilitated by an e-commerce operator, shall be deemed to be the amount credited or paid by the e-commerce operator to the e-commerce participant and shall be included in the gross amount of such sale or services for the purpose of deduction of income-tax under this subsection.
(2) No deduction under sub-section (1) shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of an e-commerce participant, being an individual or Hindu undivided family, where the gross amount of such sale or services or both during the previous year does not exceed five lakh rupees and such e-commerce participant has furnished his Permanent Account Number or Aadhaar number to the e-commerce operator.
(3) Notwithstanding anything contained in Part B of this Chapter, a transaction in respect of which tax has been deducted by the e-commerce operator under sub-section (1), or which is not liable to deduction under sub-section (2), shall not be liable to tax deduction at source under any other provision of this Chapter:
Provided that the provisions of this sub-section shall not apply to any amount or aggregate of amounts received or receivable by an e-commerce operator for hosting advertisements or providing any other services which are not in connection with the sale or services referred to in sub-section (1).
For the purposes of TDS section 194O, -
(a) 'electronic commerce' means the supply of goods or services or both, including digital products, over digital or electronic network;
(b) 'e-commerce operator' means a person who owns, operates or manages digital or electronic facility or platform for electronic commerce and is responsible for paying to e-commerce participant; (Say Swiggy, Amazon etc.)
(c) 'e-commerce participant' means a person resident in India selling goods or providing services or both, including digital products, through digital or electronic facility or platform for electronic commerce; (Business listed on Swiggy , Amazon etc)
(d) 'services' includes 'fees for technical services' and fees for 'professional services', as defined in the Explanation to section 194J
Summary of the TDS Section 194O
- E-Commerce operator (e.g. Swiggy, Amazon) will deduct TDS from remittance to business listed on their platform.
- Recipient means business listed on E-commerce operator's platform.
- Such deduction will be done at the earlier of payment or credit of remittance to the account of recipient.
- Rate of deduction will be 1%.
- Annual threshold limit will be Rs. 5,00,000 for individual or Hindu undivided family subject to availability of PAN. If PAN not provided this threshold not applicable
- In case PAN not provided by recipient then TDS @ 5% will be deducted u/s 206AA
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