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The Government of India, as part of the Finance Act, 2020, has provided for the withholding of TDS by e-commerce companies as part of the new rules and regulations introduced in Section 194-O. This has been initiated so as to allow the facilitation of the sale of goods and services of e-commerce  participants through its marketplace

This will be made effective from October 1 2020 onwards.

Below are a few questions that you may have regarding this update, along with their answers:

1. What does TDS on e-commerce transactions mean?

An e-commerce operator will be required to withhold and deposit to the Government a % of the gross sales of products/services by sellers on the marketplace. This withholding is not applicable to offline sales made by the sellers.

Gross sale = Base selling price excluding GST. For example:

Product’s base selling price  Rs. 95
Applicable GST  Rs. 5
Product selling price on Paytm Mall  Rs. 100
TDS amount  0.75% x 95 = Rs. 0.71

2. What is TDS %?

The TDS % on the gross sales of products/ services is 0.75% for FY 2020-21 applicable until March 31, 2021, and it would be 1% thereafter. In case no Permanent Account Number (PAN) or Aadhaar is provided by the seller or in cases where the PAN is inoperative, the rate increases to 5%.

3. What is the effective date of the TDS provisions?

The rules are proposed to apply from October 1, 2020.

4. Will the TDS apply on a net sale i.e. after considering sales returns and GST?

The current rules propose that TDS will apply to the gross amount of sales from goods or services.

*Subject to updation upon Government clarification regarding this

5. What proof of TDS deduction will be provided to the seller?

We understand that the provisions will be enabled for the e-commerce operator to issue a TDS certificate to the seller on a quarterly basis. Similar to the existing TDS provisions, we understand that the sellers will be able to check the TDS in their Form 26AS at https://incometaxindiaefiling.gov.in. and also use the ‘View Your Tax Credit’ facility available at www.incometaxindia.gov.in

*Subject to updation upon Government clarification regarding this

6. How can the seller claim credit or refund for the TDS deducted?

The seller can claim credit or refund for the TDS deducted by filing an income tax return for that financial year, as per their applicable due dates. Sellers may consult their respective tax advisors for the same.

7. Is linking of PAN with Aadhar mandatory for Individuals?

Linking of PAN with Aadhaar is mandatory as per the Government for Individuals. This is required to be done by March 31, 2021. Not linking the same will make the PAN inoperative from April 1, 2021, onwards. The rate of TDS for inoperative PANs is 5%.

8. How can I link the PAN and Aadhaar?

To link the PAN and Aadhaar, please visit https://www1.incometaxindiaefiling.gov.in/e-FilingGS/Services/LinkAadhaarHome.html.

Enter the details of PAN, Aadhaar Number, and Name as per Aadhaar and follow the subsequent steps.

9. What is the TAN number of PAYTM E-COMMERCE PRIVATE LIMITED if the seller wishes to apply for a Lower TDS exemption certificate?

The TAN number of Paytm E-Commerce Private Limited is ‘DELP24323F’.

10. How can we share a lower TDS exemption certificate?

To share the lower TDS exemption certificate (LDC), please raise a ticket using the Support tab in your seller panel.

Please check and ensure that the said certificate is eligible and contains Paytm E-commerce Private Limited’s Name and TAN.

Details of deduction on account of TDS under section 194O will be made available in the report available on the seller panel.