E-retailers On ONDC Required To Deduct 1% TDS On Gross Sale

New Delhi, Dec 29 (KNN) The Income Tax department has provided clarity on the TDS liability for e-retailers engaged in transactions through the government's Open Network for Digital Commerce (ONDC), on Thursday.

According to the Frequently Asked Questions (FAQ) released by the Central Board of Direct Taxes (CBDT), a 1 per cent Tax Deducted at Source (TDS) is mandated to be deducted from the gross sale amount.

This includes convenience, packaging, and shipping fees charged by e-commerce platforms facilitating orders on ONDC.

ONDC, initiated by the Department for Promotion of Industry and Internal Trade (DPIIT), prompted the CBDT to address representations seeking clarification on TDS compliance responsibilities under Income Tax laws.

In compliance with the law, each e-commerce operator is obligated to deduct TDS at a rate of 1 per cent from the sales amount of goods/services conducted through its platform.

The CBDT has explicitly stated that in scenarios involving multiple E-Commerce Operators (ECOs) in a single transaction via the ECO platform, TDS compliance rests with the supplier, who ultimately disburses payment.

The CBDT has clarified that in a situation where multiple e-commerce operators (ECOs) are involved in a single transaction through the ECO platform, the TDS compliance is to be done by the supplier side, who finally releases the payment to the supplier.

Established on December 31, 2021, ONDC operates as a Section 8 company and stands as an innovative initiative by DPIIT.

It aims to facilitate small retailers in leveraging digital commerce opportunities.

ONDC is not an application, platform, intermediary, or software but a set of specifications designed to foster open, unbundled, and interoperable networks.

(KNN Bureau)