September 9, 2020

Applicability:  This section is applicable w.e.f. October 1, 2020

Rate of TDS: 1% (However for the FY 2020-21 rate is 0.75%)

Scope:

• E- Commerce operator is liable to deduct tax at source (TDS) from payment made to the e-commerce participant.
• E- commerce participant should be resident in India
• E-Commerce operator can be resident or non-resident
• TDS to be deducted on gross amount at the time of credit of amount of sale or services or both to the account of an e-commerce participant or at the time of payment.
• Any payment made by a purchaser of goods or recipient of services directly to an e-commerce participant, shall be deemed to be the amount credited or paid by the e-commerce operator to the e-commerce participant and shall be included in the gross amount.

Exemption:

• A ceiling limit of 5 lakhs is set for Individual and HUF.
• An individual or Hindu undivided family, where the gross amount of such sale or services or both during the previous year does not exceed five lakh rupees and such e-commerce participant has furnished his Permanent Account Number or Aadhaar number to the e-commerce operator.

Definition:

(a) “Electronic commerce” means the supply of goods or services or both, including digital products, over digital or electronic network;

(b) “e-commerce operator” means a person who owns, operates or manages digital or electronic facility or platform for electronic commerce, for example Amazon, Flipcart, Myntra, etc.

(c) “e-commerce participant” means a person resident in India selling goods or providing services or both, including digital products, through digital or electronic facility or platform for electronic commerce.