TDS Deduction u/s194O & u/s194H

This query is : Resolved

K Vasu (Querist)
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24 March 2025 Dear Sir,
We are a partnership firm operating an ice cream franchise business and selling our products through Swiggy and Zomato e-commerce platforms. These platforms deduct TDS at 0.10% under Section 194O on our gross sales (Sales + Packing - Discounts), excluding GST. The payment we receive is after deducting commission, ads fees, GST, TCS, and TDS.

Our query is:
Are we, as the sellers, also liable to deduct TDS at 2% under Section 194H on the commission and at 2% under Section 194C on the ads fees charged by Swiggy and Zomato?

We request your advice to clarify this matter and, if possible, kindly provide relevant documents or circulars to support the guidance.

Thank you.
Vasu Kodiganti
Mob.No.9490753838

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 March 2025 These commission fees are typically deducted before disbursing payments to the e-commerce participants. Furthermore, TDS under Section 194O is deducted by the e-commerce operator on the entire transaction value. As per Section 194O (3) of the Act: “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.” This implies that if an e-commerce operator has already deducted TDS at 0.1% under Section 194O on the total transaction amount, the e-commerce participant is not required to deduct an additional 2% TDS under Section 194H on the commission invoice raised by the platform. Furthermore, the Central Board of Direct Taxes (CBDT), under the Ministry of Finance, has provided clarifications regarding the applicability of Section 194O through Circular No. 20 of 2023 dated 28th December 2023. The circular states that convenience fees or commissions charged by an e-commerce operator shall be considered as part of the “gross amount” for the purpose of TDS deduction under Section 194O of the Act. Therefore, it can be concluded that TDS under Section 194H shall not be applicable in cases where TDS has already been deducted under Section 194O.

K Vasu

K Vasu (Querist)
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27 March 2025 Sir, thank you for your valuable reply

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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28 March 2025 You are welcome..
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