On 28th December, the Central Board of Direct Taxes (CBDT) furnished the guidelines on the problem of deduction of 1% income tax of the gross amount of the sale of goods or services via e-commerce companies in the multiple-operator model framework.
An e-commerce operator under section 194-O of the Income Tax Act, 1961 (‘the Act’) will deduct the income tax at a 1% rate of the gross amount of sale of goods or provision of services or both eased via its digital or electronic facility or platform.
For the removal of issues, the circular guidelines have been provided and clarity has been furnished on distinct issues regarding the applicability of the act in multiple e-commerce operator model frameworks like Open Network for Digital Commerce (ONDC), CBDT said in a statement.
The information in the circular comprises distinct cases with instances and furnishes clarity on several problems. From distinct quarters having the received representations, the circular has frequently asked questions on distinct issues.
What is I-T Section 194O?
Under Section 194O I-T Act, TDS must be deducted at a 1% rate of the gross amount credited to the seller’s account at the time of payment. All transactions of the e-commerce platform make it easier to involve goods and services, including professional and technical services, fall under that category.
When crediting the account of the seller, Tax Deducted at Source(TDS) must be deducted regardless of the payment method. According to the section of 194O Financial Act 2020, e-commerce platforms are now subject to taxes.
