TDS on E-commerce transactions-Section 194O

Section 194O : TDS on E-commerce transactions

• An E-commerce operator will deduct TDS @ 1% on Sales or services provided by E-commerce participant through its Website
• The TDS to be deducted at the time credit of Sale or Service to account of E-commerce participant or payment whichever is earlier
• Note : Even if the purchaser directly makes payment to E-commerce Participant for Sale or Services received , but it is facilitated by E-commerce operator, TDS has to be deducted on such amounts also
• Threshold : An Individual or HUF, having sales/services upto 5 lacs per annum through E commerce and PAN or Aadhar is furnished
• In case of E-commerce transactions, other TDS provisions will not apply
• However if E-commerce operator provides any advertising or other services, such services will be covered under TDS provisions
• For Ex, if M/s. XYZ gives advertisement on Amazon website for Rs. 50000, it will deduct TDS while making payment to Amazon.
• “e-commerce participant” means a person Resident in India selling goods or providing services or both, including digital products, through E-commerce;

Section 194-O of the Income Tax Act:- Payment of certain sums by e-commerce operator to e-commerce participant

(1) Notwithstanding anything to the contrary contained in any of the provisions of Part B of this Chapter, where sale of goods or provision of services of an e-commerce participant is facilitated by an e-commerce operator through its digital or electronic facility or platform (by whatever name called), such e-commerce operator shall, at the time of credit of amount of sale or services or both to the account of an e-commerce participant or at the time of payment thereof to such e-commerce participant by any mode, whichever is earlier, deduct income-tax at the rate of one per cent of the gross amount of such sales or services or both.

Explanation.—For the purposes of this sub-section, any payment made by a purchaser of goods or recipient of services directly to an e-commerce participant for the sale of goods or provision of services or both, facilitated by an e-commerce operator, shall be deemed to be the amount credited or paid by the e-commerce operator to the e-commerce participant and shall be included in the gross amount of such sale or services for the purpose of deduction of income-tax under this sub-section.

(2) No deduction under sub-section (1) shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of an e-commerce participant, being an individual or Hindu undivided family, where the gross amount of such sale or services or both during the previous year does not exceed five lakh rupees and such e-commerce participant has furnished his Permanent Account Number or Aadhaar number to the e-commerce operator.

(3) 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:

Provided that the provisions of this sub-section shall not apply to any amount or aggregate of amounts received or receivable by an e-commerce operator for hosting advertisements or providing any other services which are not in connection with the sale or services referred to in sub-section (1).

(4) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the approval of the Central Government, issue guidelines for the purpose of removing the difficulty.

(5) Every guideline issued by the Board under sub-section (4) shall be laid before each House of Parliament, and shall be binding on the income-tax authorities and on the e-commerce operator.

(6) For the purposes of this section, e-commerce operator shall be deemed to be the person responsible for paying to e-commerce participant.

Explanation.—For the purposes of this section,—

(a) “electronic commerce” means the supply of goods or services or both, including digital products, over digital or electronic network;

(b) “e-commerce operator” means a person who owns, operates or manages digital or electronic facility or platform for electronic commerce;

(c) “e-commerce participant” means a person resident in India selling goods or providing services or both, including digital products, through digital or electronic facility or platform for electronic commerce;

(d) “services” includes” fees for technical services” and fees for “professional services”, as defined in the Explanation to section 194J.