194O and TCS

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CA Final Student
337 Points Joined February 2025

Suppose you're selling products online through an e-commerce platform — did you know the platform might deduct tax before paying you? Under Section 194O, is it the seller or the marketplace responsible for TDS? And what if the buyer is also charged TCS on the same transaction — can both happen together? As digital commerce grows, so do the tax rules around it. Are you clear on who deducts what, and when?

  1. Under Section 194O, is TDS applicable if the e-commerce participant is an individual with turnover below the audit limit?
  2. Can both TDS under 194O and TCS under Section 206C(1H) apply on the same transaction between a seller and buyer?
  3. If the e-commerce operator doesn’t deduct TDS under 194O, is the seller still liable to deduct tax separately?
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On 22 May 2025 at 10:46 Report
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Master in Accounts & high court Advocate
9494 Points Joined December 2011

Let's break down the tax implications for e-commerce transactions: TDS under Section 194O -

*E-commerce Operator's Responsibility: The e-commerce operator (marketplace) is responsible for deducting TDS under Section 194O on payments made to sellers. -

Applicability*: TDS is applicable on gross turnover of the seller, and the rate is 1% (0.5% for non-PAN cases). TCS under Section 206C(1H) -

*Seller's Responsibility*: The seller is responsible for collecting TCS under Section 206C(1H) on sales exceeding ₹50 lakhs to buyers. -

 *Applicability*: TCS is applicable on the seller's sales to buyers, and the rate is 0.1% (0.075% for FY 2023-24). Both TDS and TCS on the Same Transaction - *Possible*: Yes, both TDS under Section 194O and TCS under Section 206C(1H) can apply on the same transaction, but the e-commerce operator deducts TDS, and the seller collects TCS from the buyer. TDS Exemption for Small Sellers -

*Turnover Threshold*: If the e-commerce participant (seller) is an individual with a turnover below the audit limit (₹1 crore for businesses and ₹2 crores for professionals), they may be exempt from TDS under Section 194O, but this requires a declaration to the e-commerce operator. Liability for TDS Deduction -

 *E-commerce Operator's Liability*: If the e-commerce operator fails to deduct TDS under Section 194O, the seller is not liable to deduct tax separately. By understanding these tax implications, e-commerce operators and sellers can ensure compliance with tax laws and regulations [1].

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On 22 May 2025 at 15:28


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