Latest Current Affairs: CBDT Issues Guidelines for India’s E-Commerce Tax Regulation

Latest current affairs include that the CBDT, through Circular No. 20/2023 dated December 28, 2023, (ciruclar-20-2023.pdf ) has given guidelines to tackle issues and make clear how section 194-O of the Income-tax Act, 1961 works, especially in a setup with multiple e-commerce operators like the Open Network for Digital Commerce (ONDC).

According to Section 194-O, an e-commerce operator has to take out one percent of the income tax from the total amount of goods sold or services provided through its online platform. The circular explains different situations with examples, helping to understand and solve problems brought up by different people involved.

Also, it includes Frequently Asked Questions (FAQs) to make things clearer and address various concerns raised by different groups.

Section 194-O of the Income Tax Act, 1961, is related to tax deduction at source (TDS) on payment of certain sums by e-commerce operators to e-commerce participants.



This section applies to e-commerce operators who are responsible for making payments to e-commerce participants.

E-commerce Operator:

An e-commerce operator is any person who owns, operates, or manages a digital or electronic facility or platform for the electronic commerce of goods and services.

E-commerce Participant:

An e-commerce participant is a person who sells goods or provides services through the e-commerce operator’s platform.

Nature of Payment:

Section 194-O requires the e-commerce operator to deduct TDS at the time of credit or payment (whichever is earlier) of any amount to an e-commerce participant.

Rate of TDS:

The applicable TDS rate under Section 194-O is typically 1% of the gross amount of the sales or services facilitated by the e-commerce operator. However, the actual rate may vary, so it’s important to refer to the latest tax laws.

Threshold Limit:

As per the provisions, no TDS is required to be deducted if the gross amount paid or credited to the e-commerce participant does not exceed a specified threshold during the financial year. The threshold limit is also subject to change, so it’s important to check for updates.

It’s advisable to consult with a tax professional or refer to the latest official notifications from the Central Board of Direct Taxes (CBDT) or relevant authorities to get the most accurate and up-to-date information on Section 194-O and any subsequent amendments.

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