TDS on Payment by E-Commerce Operator (ECO) wef 01.10.2020 (Section 194-O):

TDS @ 1% on Payments made to E- Commerce Participants (ECP) by E- Commerce Operator u/s. 194-O w.e.f. 01.10.2020

The Finance Act, 2020 has introduced a new Section 194-O for deducting 1% TDS on Payments made to E-Commerce Participants, which will be applicable for the transactions from 1.10. 2020  onward.

If any person purchased any product or received any service through an e-Commerce Operator (A person who owns operates or manages digital or electronic facility or platform for electronic commerce) from any Person then TDS should be deducted by e-Commerce Operator as per section. 194-O. The detailed provision are as follows.

Section 194O TDS on Payment of certain sums by the e-commerce operator to e-commerce participant w.e.f 01.10.2020

1. Tax to be deducted by e-Commerce Operator at the rate of 1% (as per sec. 206AA – 5% if PAN of the deductee is not available) of the value (Excluding GST) of goods or services of an ECP sold through an e-Commerce Operator using his website At the time of credit or payment (whichever is earlier) of the amount of sale to the account of an ECP by ECO. (Explanation to Sub Sec. 1 – any payment made by Buyer of goods or services directly to an ECP, shall be deemed to be the amount credited or paid by the ECO to the ECP and shall be included in the value of the sale of goods or services for the purpose of deduction of tax under this sub-section)

2. No TDS: where the ECPis Individual or HUF and the Amount paid/expected to be paid by ECO to ECP during the previous year does not exceed 5,00,000 rupees & ECP furnished PAN or Aadhar to ECO.

3. No TDS should be deducted under any other provisions If TDS is deducted under Sub Sec. 1 or No TDS  is required to be deducted as per Sub Sec. 2 

4. The Board (Tax Department) may, with the approval of the Central Government, issue guidelines for the purpose of removing the difficulty in giving effect to the provisions of this section

5. Such Guidelines shall be laid before each House of Parliament and shall be binding on the income-tax authorities and on the ECO.