Budget 2020: Proposal for E-Commerce platforms to collect 1% TDS from sellers.

The Finance Minister Nirmala Sitharaman through her budget 2020 has proposed for a collection of 1% TDS from sellers by E-commerce Platforms.

“In order to widen and deepen the tax net by bringing participants of e-commerce within the tax net, it is proposed to insert a new section 194-O in the Act so as to provide for a new levy of TDS at the rate of one percent,” the Finance Bill had mentioned.

The proposal also puts forward the following requirements:

• The TDS is to be paid by e-commerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform.
• E-commerce operator is required to deduct tax at the time of credit of the amount of sale or service or both to the account of e-commerce participant or at the time of payment thereof to such participant by any mode, whichever is earlier.
• The tax at one percent is required to be deducted on the gross amount of such sales or service or both.

This proposal will be applicable not only to electronic retailers such as Amazon and Flipkart but also to cab and restaurant aggregators like Uber, Ola, Swiggy, Zomato, etc. Major Firms in this sector have informed that they are evaluating the impact of this proposal and is too early to comment upon the effect.

Sellers associated with this sector are predicting that this will reduce cash flow for them and that the government should consider E-Commerce platforms TDS at a reduced rate.

Subscribe Taxscan Premium to view the Judgment