File Your Income Tax Return Before 31st July 2024.
- Who is responsible to deduct TDS under section 194O?
Any person, being E-commerce operator facilitating sale of goods or provision of services of an E-commerce Participant through its digital or electronic Facility or platform (by whatever name called). - What do you mean by E-commerce, E-commerce operators and participants?
The meaning of above terms are as follows:
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- Electronic Commerce: means the supply of goods or services or both, including digital products over digital or electronic network.
- E-commerce operator: means a person who owns, operates or manages digital or electronic facility or platform for electronic commerce and is responsible for paying to ecommerce participant. (It‘s mandatory to fulfill both precondition which are conjunctive and not dis conjunctive i.e. person must own, operates or manage Digital/Electronic Facility or Platform).
- 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.
- What is the point of deduction of TDS u/s 194O?
- Tax should be deducted either 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.
- Payment made by purchaser of goods or services directly to participant shall be deemed to be payment made by E-commerce operator to participant.
- Finance Act Amendment
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- Definition of E-commerce operator initially had a condition that he shall be responsible for paying to E-commerce participant
- Anomaly due to the language where payment is directly made by purchaser of goods or services
- Anomaly now removed by Finance Act by amending definition of E-commerce operator
- Also sub-section (6) inserted – For the purpose of this section E-commerce operator shall be deemed to be the person responsible for paying to Ecommerce participant.
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- At what rate TDS has to be deducted u/s 194-O?
- TDS is to be deducted at 1% (0.75% w.e.f. 14.05.2020 to 31.03.2021) on the gross amount of sales or services or both. In Absence of Pan/Aadhaar, TDS is to be deducted @5% (Section 206AA have been amended accordingly). (It is pertinent to note that proposed section uses word ―Gross amount of such Sales‖ which means ecommerce operator will require to deduct TDS on GST portion of sales and as well as
on Commission and affiliation portion also which e-commerce operator himself will withheld) - E-commerce participants will continue to make TDS from Ecommerce operator‘s Income u/s. 194C, 194I, 194H etc. as applicable – Two way TDS
- TDS is to be deducted at 1% (0.75% w.e.f. 14.05.2020 to 31.03.2021) on the gross amount of sales or services or both. In Absence of Pan/Aadhaar, TDS is to be deducted @5% (Section 206AA have been amended accordingly). (It is pertinent to note that proposed section uses word ―Gross amount of such Sales‖ which means ecommerce operator will require to deduct TDS on GST portion of sales and as well as
- What are the exceptions to the section 194O?
- No TDS is required to be deducted, where e-commerce Participant is Individual or HUF and gross amount of such sale or services or both during the previous year does not exceed five lakh rupees AND e-commerce participant furnished Permanent Account Number or Aadhaar number to the e-commerce operator.
- Non- resident e-commerce participants are not required to deduct TDS.
- Whether the TDS is to be deducted for Non-Resident Selling good through Ecommerce Portal u/s 194O?
- E-commerce Participant is defined 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. And thus No TDS is required to be deducted when Participant is Non Resident.
- If E-commerce operator is Non-resident, Equalisation Levy will be applicable.
- Whether TDS is to be deducted if amount is directly collected by E-commerce Participant?
- For all transaction which has been facilitated by E-commerce participant, TDS has to be deducted by E-commerce operator irrespective of mode of payment to E-commerce participant.
- Whether Ecommerce Participant can apply for Lower deduction/No Deduction certificate u/s 197?
- Yes, Consequent amendment has been made in Section 197. Ecommerce Participant can make application before TDS AO who has a jurisdiction over his/her/its case.
