Section 194O has been introduced in the Union Budget 2020. This section is applicable from 1st October 2020.
Scope of section
Where the sale of goods or services of e-commerce participants is facilitated by an e-commerce operator through its digital or electronic facility or platform, such an e-commerce operator is required to deduct tax at source under section 194-O.
E-commerce operator means a person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
E-commerce participants mean a person resident in India selling goods/services (including digital products) through a digital or electronic facility or platform for electronic commerce.
Service for this purpose includes the fee for technical service/ professional service. For the purpose of this section, an e-commerce operator shall be deemed to be the person responsible for paying the e-commerce participant.
When TDS will be deducted?
Tax is deducted by the e-commerce operator at the time of
- the credit of the amount of sale of goods or service 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.
Rate of TDS
Tax is deducted at the rate of 1 percent of the gross amount of such sale of goods or services.
Note: –
- For this purpose, any payment made by the purchaser of goods/services directly to an e-commerce participant for the sale of goods/services, facilitated by an e-commerce operator, shall be deemed to be the amount credited/paid by the e-commerce operator to the e-commerce participant and shall be included in the gross amount of such sale or service for the purpose of tax deduction.
- If the recipient does not have Pan, tax is deductible (by virtue of section 206AA) at the rate of 5 percent.
When tax is not deductible?
Tax is not deductible U/s 194-O if the following conditions are satisfied: –
- E-commerce participants are Non-resident.
- E-Commerce operator is not required to deduct TDS if the amount, paid or credited to individuals or HUF during a financial year, does not exceed Rs 5 lakh.
TDS under any other section
Not Possible, if tax is deductible under section 194-O (or not deductible because of the threshold limit of Rs. 5 Lakh given above), tax cannot be deducted under any other provision of the Act. However, this rule is applicable in the case of the amount received/receivable by any e-commerce operator for hosting advertisements or providing any other service which are not in connection with the sale of goods/services given above.
Can any e-commerce participant obtain Lower/NIL TDS Certificate?
Lower/Nil TDS certificate can be obtained by e-commerce participant by submitting Form No. 13 within the parameter of section 194
How to Get Lower/Nil TDS Certificate for TDS under section 194-O?
The recipient can apply the Lower/Nil TDS Certificate in Form 13 to the Assessing Officer to get the certificate authorizing the payer to deduct tax at lower or deduct no tax as may be applicable.
In case of any difficulties arise what actions will be by the department or Government?
If any difficulty arises in a given effect to the provision of this section, the Board may, with the approval of the Central Government, issue guidelines for the purpose of removing the difficulty. These guidelines shall be laid before each House of Parliament and shall be binding on the income-tax authorities on the e-commerce and on the e-commerce operator.