Section 194-O of the Income Tax Act

Santhosh Kumar 30/12/2023
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Section 194-O of the Income Tax Act mind map Recent News Circular No. 20 of 2023 Dated 28th December 2023 Issued by Central Board of Direct Taxes (CBDT) Guidelines and Clarifications Treatment of Multiple ECOs Compliance Based on Actual Seller Fees and Charges Inclusion in Gross Amount for TDS Convenience Fees, Commission, Logistics GST and State Levies Deduction Excluding GST if Indicated Separately Purchase-Returns and Adjustments Adjustment Against Next Transaction Discounts Impact on Gross Amount Calculation Types: Seller, Buyer ECO, Seller ECO When Introduced in 2020 Why Streamline TDS on E-commerce Transactions What TDS Rate 1% on Gross Amount Applicability E-commerce Operators Amazon, Hotel Booking Platforms Resident Indian Sellers Exempt below ₹5 Lakh Annual Sales Definition E-commerce Supply over Digital Network E-commerce Operator Owns, Operates Digital Platforms E-commerce Participant Resident in India Point of Deduction Credit or Payment, Whichever is Earlier Exclusions Non-Resident Sellers Individuals or HUF below Threshold Equalisation Levy Applicable for Non-Resident Operators Who Central Government CBDT E-commerce Operators Responsible for TDS E-commerce Participants Subject to TDS Significance Enhancing Transparency Streamlining E-commerce Taxation Leveraging Large Platforms For Small E-sellers Tax Net Challenges Complexity In Compliance For Multiple Operator Models Way Forward Regular Updates and Clarifications Adapting to Evolving Digital Landscape

Section 194-O of the Income Tax Act, introduced in 2020, mandates e-commerce operators in India to deduct Tax Deduction at Source (TDS) at a rate of 1% on the gross amount of sales or services facilitated through their digital platforms. It covers resident Indian sellers and enterprises, termed e-commerce participants, and exempts those with annual sales below ₹5 lakh. The provision aims to streamline the taxation process for e-commerce transactions, enhancing transparency and compliance in the digital economy. The guidelines issued by the Central Board of Direct Taxes (CBDT) address various aspects of TDS deduction, including the treatment of fees, GST, purchase-returns, and discounts, ensuring clarity for multiple e-commerce operator models.

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