CBDT Issues Guidelines on Under Section 194-O of IT Act 1961

Current Context: The Central Board of Direct Taxes (CBDT) issued guidelines on Tax Deduction at Source (TDS) under Section 194-O of the Income-tax Act, 1961. These guidelines, detailed in CBDT Circular No. 20/2023 dated 28th December 2023, address key aspects of tax deduction for e-commerce operators (ECOs) and e-commerce participants.

• Here are some highlights from the guidelines:
• Multiple E-commerce Operators: The guidelines outline the scenarios and the respective ECOs responsible for TDS in cases involving multiple ECOs.
• Fees and Charges: The circular addresses the inclusion of convenience fees, commission charges, and logistics/delivery fees in the “gross amount” for TDS calculation.
• GST and State Levies: Tax deduction under section 194-O should be on the amount credited without including GST, state levies, or other taxes if separately indicated in the invoice.
• Purchase-Returns and Adjustments: If tax has already been deducted before the purchase-return, adjustments can be made against the next transaction with the same seller in the same financial year.
• Treatment of Discounts: The circular distinguishes between seller, buyer ECO, and seller ECO discounts.
• These guidelines serve as a comprehensive guide for e-commerce operators and participants regarding TDS under section 194-O.

Question:

Q.1 What does Section 194-O of the Income-tax Act, 1961 pertain to?
a. Tax Deduction at Source (TDS) for e-commerce operators
b. Goods and Services Tax (GST) for retail businesses
c. Corporate tax for multinational companies
d. Income tax for individual taxpayers