Income Tax: CBDT releases circular on 1% TDS on e-commerce transactions. Details here

livemint.com:

Income Tax (I-T) Act which mandated that e-commerce operator will deduct income tax at the rate of one percent of the gross amount of sale of goods or provision of service or both. The Central Board of Direct Taxes (CBDT) released a circular on Dec 28 to clarify certain doubts relating to the application of this provision. Let us understand some of the key provisions of this circular: The circular states that the deduction is meant to be made at the time of credit of the amount of sale or service to the account of e-commerce participant.

The confusion, however, arises when there is more than one e-commerce operators (ECO). And there may be a platform or network such as Open Network for Digital Commerce (ONDC) on which multiple operators are participating in a single transaction. For example, there could be a buyer side e-commerce operator and one seller side e-commerce operator.

When there is a buyer side e-commerce operator providing an interface to the buyer and a seller side e-commerce operator giving an interface to the seller, then the tax deduction is supposed to be done by the seller side operator who eventually makes the payment to the seller. When e-commerce operators are levying convenience fees or charging commission, or payments are made to network such as to the ONDC, then one might wonder whether these payments (or commissions) become a part of the gross amount for the purpose of calculating one percent TDS. As we know that the tax is deducted on the gross amount of such sales of goods or services.