The availability and purchase of digital goods and services has risen worldwide as information and technology have grown. Today, business doesn't require a physical location. Indian e-commerce is booming rapidly, and small firms are joining as sellers.
E-commerce operators must deduct TDS u/s 194O on gross sales of services starting October 1, 2020. Learn TDS applicability, rates, threshold, and due dates.
This document covers
E-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.
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.
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.
Union Budget 2020 has been introduced the section 194O and it is applicable from 01st oct 2020
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.
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
Note: The E-Commerce Participant should furnish his PAN/Aadhaar to e-commerce operator
TDS u/s 194O needs to be deducted at the following times which ever is earlier
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