In order to widen and deepen the tax net by bringing participants of e-commerce within tax net, the following new section 194-0 has been inserted in the Act, w.e.f. 1.4.2020:
For the purposes of this section,—
(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 and is responsible for paying to e-commerce participant;
(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;
(d) "services" includes fees for technical services and fees for professional services', as defined in the Explanation to section 194J.
1. TDS by e-commerce operator, where sale of goods or provision of services of an ecommerce participant is facilitated by an e-commerce operator through its digital or electronic facility or platform [Section 194-0(1)]
Notwithstanding anything to the contrary contained in any of the provisions of Part B of this Chapter,—
Where sale of goods or provision of services of an e-commerce participant is facilitated
by an e-commerce operator through its digital or electronic facility or platform (by whatever name called), such e-commerce operator shall, 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 thereof to such e-commerce participant by any mode, whichever is earlier, deduct income-tax at the rate of 1% of the gross amount of such sales or services or both.
Important Note—In case of the above, a proviso has been inserted under section 206AA(1) to provide that where the PAN is not furnished by the e-commerce participant, the rate of TDS shall be 5% (instead of 20%).
1. For the purposes of this sub-section, any payment made by a purchaser of goods or recipient of services directly to an e-commerce participant for the sale of goods or provision of services or both, facilitated by an e-commerce operator, 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 of such sale or services for the purpose of deduction of income-tax under this sub-section. [Explanation]
2. For the purposes of this section, e-commerce operator shall be deemed to be the person responsible for paying to e-commerce participant [Section 194-0(6)].
2. No TDS if sum paid or credited to the account of an e-Commerce participant, being an individual or Hindu undivided family does not exceed Rs. 5,00,000 [Section 194-0(2)]
No deduction under section 194-0(1) shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of an e-commerce participant, being an individual or Hindu undivided family, where the gross amount of such sale or services or both during the previous year does not exceed 5,00,000 and such ecommerce participant has furnished his Permanent Account Number or Aadhaar number to the e-commerce operator.
3. No liability to deduct TDS under other sections, If the transaction is covered under section 194-0(1) & (2) [Section 194-0(3)]
Notwithstanding anything contained in Part B of this Chapter, a transaction—
(i) in respect of which tax has been deducted by the e-commerce operator under section 194-0(1), or
(ii) which is not liable to deduction under section 194-0(2),
shall not be liable to tax deduction at source under any other provision.
However, the provisions of this sub-section shall not apply to any amount or aggregate of amounts received or receivable by an e-commerce operator for hosting advertisements or providing any other services which are not in connection with the sale or services referred to in section 194-0(1). [Proviso to section 1 94-0(3)]