CBDT Issues Guidelines u/s 194-O of the Income-tax Act, 1961

Last updated: 29 December 2023

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The Central Board of Direct Taxes (CBDT) has released new guidelines under Section 194-O of the Income-tax Act, 1961. These guidelines aim to clarify tax deduction rules for e-commerce operators, specifically addressing situations involving multiple operators like the Open Network for Digital Commerce (ONDC). The circular provides detailed examples and answers frequently asked questions to ensure clarity on the one per cent tax deduction from gross sales facilitated through digital platforms.

Section 194-O of the Income-tax Act, 1961 (‘the Act’) provides that an e-commerce operator shall deduct income-tax at the rate of one per cent of the gross amount of sale of goods or provision of service, or both, facilitated through its digital or electronic facility or platform.

CBDT Issues Section 194-O Income Tax Guidelines

Vide CBDT Circular No. 20/2023 dated 28.12.2023 guidelines have been issued for removal of difficulties and clarity has been provided on various issues pertaining to applicability of section 194-O of the Act in a multiple e-commerce operator model framework, such as the Open Network for Digital Commerce (ONDC). The Circular details several types of situations with examples & provides clarity on multiple issues. Having received representations from various quarters, the CBDT Circular incorporates FAQs on varied issues.

Click here to view / download the said circular

FAQ :

Section 194-O states that an e-commerce operator must deduct income tax at a rate of one per cent of the gross sale amount for goods or services facilitated through their digital platform.

The guidelines, issued via CBDT Circular No. 20/2023, are designed to remove difficulties and provide clarity on the application of Section 194-O, particularly in complex scenarios involving multiple e-commerce operators.

Yes, the guidelines specifically address the applicability of Section 194-O in a multiple e-commerce operator model framework, such as the Open Network for Digital Commerce (ONDC).

The circular details various situations with examples and incorporates Frequently Asked Questions (FAQs) to provide clarity on different issues related to Section 194-O.

The guidelines were issued by the Central Board of Direct Taxes (CBDT).

Attached File : 671907_22963_ciruclar_20_2023.pdf

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