Guidelines under section 194-O(4) and section 206C(1-I) of the Income-tax Act, 1961

Circular No. 17 of 2020

F. No.370133/22/2020-TPL

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

(TPL Division) 

Dated: 29th September, 2020

Sub.: Guidelines under section 194-0 (4) and section 206C (1-1) of the Income-tax Act, 1961 - reg.

Finance Act, 2020 inserted a new section 194-0 in the Income-tax Act 1961 (hereinafter referred to as "the Act") which mandates that with effect from 1 st day of October, 2020, an e-commerce operator shall deduct income-tax at the rate of one per cent (subject to the provisions of proposed section 197B of the Act) of the gross amount of sale of goods or provision of service or both, facilitated through its digital or electronic facility or platform. However, exemption from the said deduction has been provided in case of certain individuals or Hindu undivided family fulfilling specified conditions. This deduction is required to be made at the time of credit of amount of such sale or service or both to the account of an e-commerce participant or at the time of payment thereof to such e-commerce participant, whichever is earlier.

2. Finance Act, 2020 also inserted sub-section (1 H) in section 206C of the Act which mandates that with effect from 1 st day of October, 2020 a seller receiving an amount as consideration for sale of any goods of the value or aggregate of such value exoeeding fifty lakh rupees in any previous year to collect tax from the buyer a sum equal to 0.1 per cent (subject to the provisions of proposed sub-section (lOA) of the section 206C of the Act) of the sale consideration exceeding fifty lakh rupees as income-tax. The collection is required to be made at the time of receipt of amount of sales consideration.

3. Sub-section (4) of section 194-0 and sub-section (I-I) of section 206C of the Act empowers the Board (with the approval of the Central Government) to issue guidelines for the purpose of removing difficulties. Various representations have been received by the Board for issuing guidelines for removing certain difficulties. In exercise of power contained under sub-section (4) of section 194-0 of the Act and sub-section (I-I) of section 206C of the Act, the Board, with the approval of the Central Government, hereby issues the following guidelines.

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