They have said they are looking at the interests of the small enterprises that carry on business operations on their online marketplace.

Levy of 1 pc TDS Amazon Flipkart may seek clarification from govt on budget proposal
Atom Budget 2020 Monday, February 03, 2020 - 16:03

Finance Minister’s long and winding budget speech in the Parliament included an announcement that the e-commerce companies will have to deduct a 1% TDS from the sellers on their respective platforms from April 1, 2020. The only exemption from this levy will be those sellers whose turnover on e-commerce sites has been less than ₹5 lakh the previous financial year.

The two leading players in the segment, Amazon and Flipkart have reacted to the announcement saying they may seek clarifications from the government on the move.

They have said they are looking at the interests of the small enterprises that carry on business operations on their online marketplace.

The relevant insertion in the budget document reads as below:

"In order to widen and deepen the tax net by bringing participants of e-commerce (sellers) within 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 per cent".

There is then the explanation on how this will be implemented on the ground with the TDS deduction route.

This may not surprise many since governments keep looking for newer sources of revenue and when the ecommerce companies went to town claiming how they have been able to achieve billions of dollars’ worth sales on their platforms in a matter of days, someone in the government would have woken up to the fact that it is missing out on the tax revenue from here.

It should be understood that the 1% TDS will actually mean nothing to a trader if there is no taxable income at the end of the year and the amount deducted and deposited on their behalf by the e-commerce platform operator can be collected back as refund. The only aspect would be that the funds would get blocked for that duration.

The e-commerce companies are already covered under the GST regime where they are following the norms of compliance and this will be one more stipulation to follow. 

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