There have been certain ambiguities in the minds of the taxpayer, related to the new TDS provisions inserted under Section 194-O vide Finance Act, 2020, wherein e-commerce operator has to deduct 1% TDS on gross amount of such sales or services or both received from e-commerce participants.
CBDT vide Circular No. 17 of 2020 dated 29.09.2020 has issued clarifications in order to remove such difficulties and ensure well-ordered implementation. The major highlights of the circular are as follows:
CBDT has clarified that the TDS provisions for e-commerce operators shall not apply to transactions related to securities and commodities traded through recognized stock exchanges
CBDT has clarified that the TDS provisions for e-commerce operators shall not apply twofold i.e. payment gateway shall not deduct TDS if the e-commerce operator (facilitating the sale of goods or services) has already deducted the TDS of e-commerce participants under the newly inserted section of 194-O on the same transaction, provided an undertaking has been taken in this regard by such payment gateway.
CBDT has clarified that the:
The relaxation threshold limit of Rs. 5 lakhs for individual and HUF e-commerce participants shall be calculated from 01.04.2020 for the purpose of TDS applicability but TDS shall be deducted only on the amount credited or paid after 01.10.2020.
Source: CBDT Circular No. 17/ 2020