Friday, July 31, 2020

TDS on E-Commerce Operators

Sec 194-O: 1% TDS on Payment to Vendor by E-Commerce Website

The Finance Act 2020 introduced Section 194-O in the Income Tax Act, 1961, as per which E-Commerce Operators (ECO) should deduct TDS @1% at the time of credit of the gross amount of sale of goods/services to the account of an E-Commerce Participant (ECP) or at the time of making payment to an ECP, whichever is earlier.

An ECP is a person is a resident of India who sells goods, services, or both through an electronic facility provided by an ECO.

Threshold Limit & PAN/Adhaar

The ECO is not required to deduct TDS if the gross amount of sale of goods or services during the financial year by and Individual or HUF vendor ECP does not exceed Rs 5 lakh, and if the vendor ECP has furnished his PAN or Aadhaar.

If the e-Commerce participant does not furnish his PAN or Aadhaar, TDS must be deducted at the rate of 5%, as per provisions of Section 206AA.

Payment & Return Filing

All other provisions with respect to due date for payment of TDS and return filing remain the same as defined under the Income Tax Act for other payments requiring TDS deduction and deposit.