CBDT issue guidelines on TDS under section 194O on payments to e-commerce participants

CBDT issue guidelines / FAQs on TDS under section 194O on payments by e-commerce operators to e-commerce participants

Section 194-O mandates that an e-commerce operator (ECO) shall deduct income-tax at the rate of one per cent of the gross amount of sale of goods or provision of service 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 fulfilling certain conditions. 

CBDT Guidelines under sub-section (4) of section 194-O of the Income-tax Act 1961

CBDT acting on the representations received from various stakeholders has issued Circular No. 20 of 2023 dated 28th December 2023 giving clarifications / guidelines in the form of Question and Answers.

1. Who should deduct tax at source where there are multiple e-commerce operators (ECO) involved in a transaction?

2. E-commerce operators may be levying convenience fees or charging commission for each transaction and seller might levy logistics & delivery fees for the transaction. Payments may also be made to the platform or network (e.g. ONDC) provider for facilitating the transaction. Would these form part of “gross amount” for the purposes of TDS under section 194-0 of the Act?

3. How will GST, various state levies and taxes other than GST such as VAT/ Sales tax/ Excise duty / CST be treated when calculating gross amount of sales of goods or provision of services as per the provisions of section 194-0 of the Act?

4. How will adjustment for purchase-returns take place?

5. How will discounts given by seller as an e-commerce participant or by any of the multiple e-commerce operators be treated while calculating “gross amount”?

Download CBDT Circular No. 20/2023 Click Here >>

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