Table of Contents
1. Section 194-O of the Income Tax Act, 1961
- A E- commerce operator is required to deduct TDS @ 1% while making payment to E-commerce participants on the gross amount of sale of goods/services or both.
2. What is the difference between e-commerce operator and an e-commerce participant?
- An e-commerce operator is a person who owns, operates or manages digital or electronic facility or platform for electronic commerce operations/sales. Eg. Flipkart (or) Amazon
- An e-commerce participant is the person selling goods or services or both through the platform established by the e-commerce operator.
3. What do you mean by “gross sales”?
- E-Commerce operator shall deduct an amount as commission before making payment to the E-commerce participant.
- The gross sale value excluding the commission is the “gross sales” for the purpose of deducting TDS under this section.
4. Who is responsible to deduct TDS under section 194O?
- The E-commerce operator (Flipkart or amazon) is liable to deduct tax while making payment to the sellers (e-commerce participants) selling through their website or any electronic medium.
5. What is the rate of TDS and when will the tax be deducted under section 194O?
An e-commerce operator is liable to deduct tax at the rate of 1%
- at the time of credit of the amount of sale of goods or services to the account of an e-commerce participant (or)
- at the time of making payment to such e-commerce participant by any mode,
whichever is earlier.
6. Circumstances where TDS need not be deducted under section 194O?
TDS under section 194O need not be deducted
- If the e-commerce participant is an individual or HUF and PAN has been furnished and
- The gross amount of sale or service or both made by such individual or HUF does not exceed Rs.5 lakhs during the previous year.
7. What would be the rate of TDS in case PAN is not furnished by the e-commerce participant?
- TDS at the rate of 5% will be deducted by the E-commerce operator in cases where PAN is not furnished by the e- commerce participant.