Unravel the intricacies of TDS under Section 194-O of the Income Tax Act, 1961 effective from 01/10/2020. Explore its applicability, limits, eligibility criteria for e-commerce operators and participants, and grasp the essentials for compliance.
Section 194-O of the Income Tax Act 1961 was introduced in the Union Budget 2020 and came into effect on 1st October 2020. This section applies to e-commerce operators who are responsible for paying any amount to e-commerce participants.
The main objective of Section 194-O is to bring e-commerce transactions under the tax net and to ensure that e-commerce participants pay their taxes correctly. The section imposes a TDS (Tax Deducted at Source) at the rate of 1% on the gross amount paid or credited to the e-commerce participant by the e-commerce operator.