CBDT Guidelines under sub-section (4) of section 194-O, sub-section (3) of section 194Q and sub-section (1H) of section 206C of Income-tax Act, 1961
Finance Act, 2020 inserted a new section 194-O in the Income-tax Act 1961 (hereinafter referred to as ” the Act”) which mandates that with effect from 1st day of October, 2020, an e-commerce operator shall deduct income-tax at the rate of one per cent o f the gross amount of sale of goods or provision of services or both, facilitated through its digital or electronic facility or platform. However, exemption from the said deduction has been provided in case of certain individuals or Hindu undivided family subject to fulfilment of specified conditions. This deduction is required to be made at the time of credit of the amount of such sale or service or both to the account of an e-commerce participant or at the time of payment thereof to such e-Commerce participant, whichever is earlier.
Finance Act, 2020 al so inserted sub-section (1-H) in section 206C of the Act which mandates that with effect from 1st day of October, 2020 a seller receiving an a mount as consideration for sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year shall collect from the buyer, a sum equal to 0.1 per cent of the sale consideration exceeding fifty lakh rupees as income-tax. T he collection is required to be made at the time of receipt of amount of sale consideration. Seller is defined as the person whose total sales or gross receipts o r turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the sale of good is carried out. Central Government has been authorised to specify by notification in the Official Gazette, the person who would not be considered as seller for the purposes of this section, subject to the fulfillment of certain conditions as specified therein.
Finance Act, 2021 inserted a new section 194Q to the Act which took effect from 1st day of July, 2021. It applies to any buyer who is responsible for paying any sum to any resident seller for purchase of any goods or the value or aggregate o f value exceeding fifty lakh rupees in any previous year. The buyer, at the time of credit of such sum to the account of the seller or at the time of payment , whichever is earlier, is required to deduct an amount equal to 0.1 % of such Sum exceeding fifty lakh rupees as income tax. Buyer is defined to be person whose total sales or gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is carried out. Central Government has been authorised to specify by notification in the Official Gazette, person who would not be considered as buyer for the purposes of this section, subject to fulfillment o f specified conditions.
CBDT vide circular no. 17 of 2020 dated 29.09.2020 issued guidelines were in relation to the provisions of section 194-O and section 206C(1-H) of the Act in certain cases to remove difficulties and provide clarity for certain transactions. Further, vide circular no. 13 of 2021 dated 30.06.2021, guidelines were issued by CBDT in relation to the provisions of section 194Q through which the difficulties arising from the applicability of the provisions of section 194Q in certain cases were removed. Furthermore, guidelines with respect to the cross application of the provisions of sections 194-O, 194Q and 206C ( 1-H) were also issued through the said circular.
To further remove the difficulties, the CBDT has issued Circular No. 20 of 2021 dated 25th November 2021, to issue more guidelines under sub-section (4) of section 194-O, sub-section (3) of section 194Q and sub-section (I-H) of section 206C.
CBDT Guidelines on TDS provisions u/s 194O, 194Q & 206C
The guidelines covers the following issues:
(a) E-auction services carried out through electronic portal
(b) Adjustment of various state levies and taxes other than GST
(c) Applicability of section 194Q of the Act in cases where exemption has been provided under section 206C (1 A)
(d) Applicability of the provisions of section 194Q in case of department of Government not being a public sector undertaking or corporation
Download Circular No. 20 of 2021 Click Here >>
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