TDS on e-Commerce Transactions u/s 194O

This document covers

1. E-Commerce
2. E- Commerce operator
3. E-Commerce Participant (Sellers)
4. Upto 30th Sep 2020
5. W.e.f 01st Oct 2020
6. Persons responsible to deduct TDS (Deductor)
7. Rate of TDS
8. Threshold of Deduction u/s 194O
9. Time of Deduction of TDS
10. Due Date for TDS Payment
11. TDS Returns

1. E-Commerce

E-Commerce means the supply of goods or services or both including digital products over digital or electronic network.

2. E-Commerce operator

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.

3. E-Commerce Participant (Sellers)

E-Commerce Participant (Sellers) 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.

4. Upto 30th Sep 2020

Earlier there was no TDS on payments made by e-commerce operators to E-Commerce participants (sellers). Hence there is no proper mechanism to track the sales happened through e commerce and most of the sellers has escaped from the purview of income tax.

5. W.e.f 01st Oct 2020

Union Budget 2020 has been introduced the section 194O and it is applicable from 01st oct 2020

6. Persons responsible to deduct TDS (Deductor)

Every E-Commerce Operator (Resident and Non-Resident) is required to deduct TDS on the gross amount of sales or services or both made by Resident E-Commerce Participants (Sellers).

Note: If the E-Commerce Participant (seller) is Non Resident, the E-Commerce operator is not required to deduct TDS u/s 194O. In this case, the provisions of Equalisation levy will apply.

7. Rate of TDS

The Rate of TDS u/s 194O is 1% on the gross amount of sales or services or both.

Example: Radha Krishna Private Limited is a resident of India and registered as seller Amazon India (E-Commerce Portal). The Gross sale made by Radha Krishna Private limited through Amazon is Rs 6 lakhs+GST during FY 2022-23. The commission charged by Amazon is Rs 50,000. In this case, Amazon is required to deduct TDS @ 1% on 6 lakhs

8. Threshold of Deduction u/s 194O

• If the E-Commerce Participant (seller) is Individual/HUF – Rs 5 Lakhs

  Note: The E-Commerce Participant should furnish his PAN/Aadhaar to e-commerce operator

• If the E-Commerce Participant (seller) is other than Individual/HUF – No Threshold. TDS needs to be deducted irrespective of the gross sales.

9. Time of Deduction of TDS

TDS u/s 194O needs to be deducted at the following times which ever is earlier

• At the time of Credit of amount of such sale of goods or services or both to the account of an e-commerce participant
• At the time of payment to e-commerce participant

10. Due Date for TDS Payment

The due date for payment of TDS deducted u/s 194O is within 7 days from the end of the month in which deduction is made. However, for the March month, due date is April 30

11. TDS Returns

• TDS Returns needs to be filed in Form 26Q for all persons except the individuals or HUF who are not liable to Audit
• TDS Return filing is Quarterly
• The due date for the TDS Returns are as follows
  • April to June – July 31
  • July to September- October 31
  • October to December – January 31
  • January to March – May 31
• TDS Certificates needs to be issued within 15 days from the date of filing in Form 16A