Section 194-O : TDS on E-commerce Transactions
Budget 2020 has introduced TDS on E-commerce Transactions. The main motive behind this section is to trace the sellers who were registered on sited like amazon, flipkart etc. and were making big sales, but were not filing ITR.
Mechanism of TDS on E-Commerce Transactions
E-Commerce Operator will deduct TDS of E-Commerce Participants who are selling their goods or services via their platform.
When will the TDS be deducted?
The TDS will be deducted at time of payment or credit of amount of sale of goods or service or both to the account of E-Commerce participant.
What is Rate of Deduction of TDS on ECommerce Transactions?
Rate of Deduction of TDS on E-Commerce is 1% on gross amount of sale of Goods or service or both.
Point of Discussion:
Please note that by Gross amount of Goods or Service or both we mean, that the E-Commerce operator will also deduct TDS on Commission portion of sale made, which the E-Cmmerce Operator will with held himself.
This Gross amount should not include GST.
This has been explained by below mentioned example:
| Total Sales | Rs. 100000 |
| GST @ 18% | Rs. 18000 |
| Commission portion of E-Commerce Operator @ 2% of sales | Rs. 2000 |
In this case TDS should be deducted on Rs. 100000. However this is based on authors view and no clarification is avaliable for the same.
This has indeed increased the compliance burden of the E-Commerce operators who were already deducting TCS under the provisions of GST Act.
Is there any exemption from applicability of this section?
Yes, the provisions of this section will not be applicable if:
- Gross amount of sale of goods, service or both is not more than 5 Lakh;
- and, E-Commerce participant has furnished his valid PAN or Aadhaar.
- and, participant should be individual or HUF.
Other important points:
Please note that, if TDS has been deducted u/s 194-O then no TDS will be levied on that transaction under any other provision of Chapter XVII-B of the Act.
Simlarly, if the transaction is exempted from applicability of TDS under this section, then no TDS will be levied on that particular transaction under any other provision of Chapter XVII-B of the Act.
No exemption will apply to any amount received or receivable by an e-commerce operator for hosting advertisements or providing any other services which are not in connection with the sale of goods or services referred to in sub-section (1) of the proposed section.
Memorandum of Fianance Bill 2020
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