New guidelines regarding TDS and TCS

The e-commerce operator has been empowered to charge an income tax at the rate of 1% on the total value of goods or services, or both, through its digital or electronic facility or platform from 1st October 2020.

The Income Tax Department has issued guidelines regarding the implementation of the tax collection at source TCS provision at source. Under this, the e-commerce operator has to take a tax rate of one percent on the sale of goods and services from one October (1st Oct, 2020). A new Section 194-O has been added to the Income Tax Act 1961 in the Finance Act 2020. Under this, the e-commerce operator has been empowered to charge an income tax at the rate of 1% on the total value of goods or services, or both, through its digital or electronic facility or platform from October 2020.

The seller will have to collect tax at the rate of 0.1 % from the buyer A sub-section (1H) has also been added to Section 206C of the Income Tax Act in the Finance Act 2020. Under this, if the sale price is more than Rs 50 lakhs or the gross sales value during the previous year was more than Rs 50 lakhs, the seller will have to collect tax at the rate of 0.1 percent from the buyer. The Central Board of Direct Taxes (CBDT) said that it had received memorandum in this regard that some exchanges and at the level of the clearing corporation, there was difficulty in implementing the provisions of Tax Deductions at Source (TDS) and Tax Recovery at Source (TCS). It was told that many times there is no direct contact between buyer and seller in such deals.

The CBDT has clarified that the new provision of TCS which has been implemented will not be applicable to commodities or securities deals in recognized stock exchanges. This provision will also not apply to the transaction of electricity, renewable energy certificates and energy saving certificates.

Also, Read: "CBDT Has Notified Belated And Revised Income Tax Return Deadlines."

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