Section 194O- TDS on e-commerce participants

As we all know that from 1.10.2020 section  194-O is going to apply for payment made by E-Commerce operator to E-Commerce participant is required to deducted TDS as per Provision of section 194-O.

Section states that where sale of goods or provision of services of an E-Commerce participant is facilitated by E-Commerce operator through its digital or electronic facility or platform(by whatever name called), than such E-Commerce operator at the time of credit of amount of sale or services or both on account of an E-Commerce participant or at the time of payment thereof to such E-Commerce participant by any mode, Which Ever Is Earlier, Deduct Income tax at Rate of 1 % of GROSS AMOUNT OF SUCH SALE OR SERVICE OR BOTH.

As governments of India declare in AATMA NIRBHAR ECONOMIC PACKAGE in order to provide more fund at disposal of the taxpayer TDS rate has been reduced by 25% so now TDS required to be deduct under this section shall be @ 0.75% till 31.03.2021.

Now what if any payment made by purchaser of goods or recipient of services directly to E-Commerce participant for sale of goods or provision of services or both which was facilitated by E-Commerce operator?

As per the explanation given by section that even if any payment made directly to E-Commerce participant by purchaser of goods or recipient of services which was facilitated by E-Commerce operator than it shall be deemed that payment made by E-Commerce operator to E-Commerce participant and shall also include in gross amount of such sale or services for the purpose of deduction under this section.

As per sub-section (2) of this section E-Commerce participant being Individual or Hindu Undivided family, where gross amount of sale or services or both during previous year does not exceed 5 lacs and E-Commerce participant furnished his or it’s Pan or Aadhaar number than NO TDS under sub-section (1) of 194-O.

As per sub-section (3) of this section NO TDS shall deduct under any provision of this Chapter if TDS deducted as per subsection (1) of this section or which is not liable to deduct as per sub section(2) of this section.

Proviso to this sub-section is that Sub section (3) is not applicable for any amount received or receivable which are not in connection with sale of goods or service as referred to in sub section (1).

Now there is question about calculation threshold for F.Y. 2020-21?

Other than Individual or Hindu Undivided family there is no Threshold for deducting TDS under this section so now how we calculate limit of Gross sale in case of Individual or Hindu Undivided family this question clarified by CBDT by Circular no. 17 dated 29^th September, 2020 that threshold of 5 Lacs for triggering deduction under this section shall be counted from 1^st April, 2020. Hence if gross sale or services or both facilitated during 2020-21 (including up to 30^th September, 2020) exceed 5 Lacs than TDS require to deducted on any sum credited or paid on or after 1^st of October, 2020 so as per circular there is no need to deduct TDS for payment made before 1^st of  October, 2020.

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