ELECTRONIC COMMERCE OPERATORS – BUDGET IMPACT

BUDGET 2020 CAPSULE - 5

ELECTRONIC COMMERCE OPERATORS – BUDGET IMPACT

1] Who is an Electronic Commerce Operator and an E-commerce Participant?

Electronic Commerce Operator (ECO): Electronic Commerce Operator is a person who sales goods/provides services to the ultimate customers on behalf of the E-commerce participant (viz. Original Seller) through its digital or electronic facility or platform commonly known as E-commerce. Ex: Flipkart, Redbus.

E-commerce Participant: E-commerce Participant is a person who sales goods or provides services to the ultimate customer through the digital or electronic facility provided by the Electronic Commerce Operator.

     

2] Who is required to comply with the provisions of TDS?

Electronic Commerce Operator Needs to deduct the amount of TDS and remit it to the government on or before 7^th of every succeeding month.

Example: Suppose a person buys an item worth Rs. 1,000/- through Flipkart. Flipkart will collect Rs. 1,000/- from the buyer and transfer Rs. 990/- to the seller and remit TDS of Rs. 10/- (being 1% of 1000/-) to the government.

3] When TDS is required to be made?

Electronic Commerce Operator (ECO) is bound to deduct the TDS either on making the payment to the seller or on accounting the same in the books of accounts of the Electronic Commerce Operator whichever is earlier.

4] What is the prescribed rate of TDS?

The prescribed rate of TDS is 1%. If the E-commerce participant doesn’t have PAN TDS will be done at the rate of 5%.

5] Whether any relaxation is available for Individual / HUF?

Yes. Relaxation has been given only to Individuals/HUFs. Electronic Commerce Operator need not to deduct TDS if the gross amount credited/paid during the year is not more than Rupees Five Lakhs and PAN/Adhaar of such assessee has been provided.

6] Is it applicable only for goods traded over?

No. Applicability of TDS is not restricted only for goods traded over internet. It also extends to services provided. Services also includes “fees for professional services” and “Fees for technical services.”

7] What if the same transaction is covered by other sections also?

If the transaction is covered specifically under this section then for the same transaction no need to do TDS under other provisions of the Act.

8] What are the serviced for which TDS is not required to be made?

TDS is not required to be made on the amount collected by the Electronic Commerce Operator for hosting the advertisement or for any other services which are not in connection with the sales or services of the E-commerce participant.

9] When Electronic Commerce Operator need not to do TDS?

Electronic Commerce Operator being an Individual/HUF having Turnover/gross receipts less than Rupees One Crores or an individual/HUF whose accounts are not required to be audited u/s 44AB of the Income Tax Act, 1961 in the previous financial year need not to comply with the provisions of TDS.

TWISTS AND TURNS IN THE PROVISION

1)   Electronic Commerce Operator irrespective of his “Residential Status” need to comply with the TDS Provisions. So, an ECO being an NRI or a Foreign Company carrying on business in India is also need to company with the provisions.

2)   If the Electronic Commerce Participant is a Non-resident, then ECO need not to deduct the TDS irrespective of the volume of transactions. TDS need to be done only for payments made to Resident Electronic Commerce Participant.

3)   Relaxation to Individuals/HUFs is given provided the volume of transaction is below Rupees Five Lakhs per annum. However, the act is silent whether the said amount is fixed per ECO or all ECOs combined together.

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Sanjay R Shetty

Chartered Accountant