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

Last updated: 30 September 2020

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New guidelines have been issued under sections 194-O(4) and 206C(1-I) of the Income-tax Act, 1961, effective from 1st October 2020. These sections introduce tax deductions for e-commerce operators on sales facilitated through their platforms and tax collection by sellers on goods exceeding a certain value. The guidelines aim to address difficulties and clarify the implementation of these provisions.

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, 1

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FAQ :

From 1st October 2020, e-commerce operators must deduct income tax at 1% of the gross sale amount facilitated through their platform, unless certain conditions for exemption are met.

The deduction must be made at the time of crediting the sale or service amount to the e-commerce participant's account or at the time of payment, whichever is earlier.

From 1st October 2020, sellers receiving consideration for the sale of goods exceeding fifty lakh rupees in a previous year must collect income tax at 0.1% of the sale consideration exceeding this threshold.

The tax collection must be made at the time of receipt of the sale consideration.

The guidelines are issued under section 194-O(4) and 206C(1-I) to remove difficulties and clarify the implementation of the new tax provisions introduced by the Finance Act, 2020.