Tax Deducted at Source (TDS) FAQ

Frequently Asked Questions (FAQ) on Tax Deducted at Source (TDS) under proposed section 194-O of the Income Tax Act, 1961

In the Finance Act 2020, the Government has introduced new rules in Section 194-O which provides a withholding of TDS by e-commerce companies for facilitating sale of goods and services of e-commerce participants through its marketplace. These rules are effective from October 1, 2020.

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

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

2. What is the TDS %?

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

3. Are any online sellers excluded from the TDS?

There is an exclusion for Individuals and Hindu Undivided Sellers (HUFs) where the gross sales of the product or service during the financial year is less than INR 500,000 and PAN or Aadhaar is provided. Further, only Indian resident sellers are covered in the TDS rules.

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

The rules apply from October 1, 2020.

5. Whether the TDS will be applied on a net sales, i.e. after considering sales returns?

As per the Tax rules, TDS will be applied on the gross amount of sales from goods or services without considering sales returns.

6. Whether TDS will be applied on GST component also?

No, TDS will not be applied on GST component.

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

Amazon issues Form 16A certificate (certificate of deduction of tax at source by any person in accordance with the Income Tax Act) on processing of quarterly TDS statements. The certificate can be downloaded by visiting Reports > Tax Document Library > 194-O TDS Certificate on Seller Central. To learn more about Form 16A, please see Frequently Asked Questions on Form 16A certificate under Tax Deducted at Source (TDS) section 194-O of the Income Tax Act, 1961.

Sellers can also check the TDS credit in their Form 26AS at https://incometaxindiaefiling.gov.in, and also use the “View Your Tax Credit” facility available at www.incometaxindia.gov.in.

8. 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.

9. Is linking of PAN with Aadhaar mandatory for Individuals?

As per the Government, linking of PAN with Aadhaar is mandatory 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 onward. The rate of TDS for inoperative PANs is covered in FAQ #2.

10. How can I link PAN and Aadhaar?

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

Please enter details of PAN, Aadhaar Number and Name as per Aadhaar, and follow subsequent steps.

11. What if the PAN status provided by NSDL does not match with the PAN status as per Income Tax Department?

Sellers can check the PAN status at the below link provided by Income Tax Department. If the status provided by the below link does not match with the status provided by NSDL, then please reach out to the Income Tax Department to rectify the PAN details.

Income Tax Department link: https://www1.incometaxindiaefiling.gov.in/e-FilingGS/Services/VerifyYourPanDeatils.html?lang=eng

NSDL link: https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp

12. What is the TAN number of Amazon Seller Service Private Limited, if seller wants to apply for a Lower TDS exemption certificate?

TAN number of Amazon Seller Service Private Limited is “BLRA14702C”.

13. How can we share lower TDS exemption certificate?

To share the lower TDS exemption certificate (LDC), please contact Seller Support and create a case with the subject line: TDS LDC. Attach a PDF copy of Lower TDS exemption Certificate (LDC).

Please check and ensure that the certificate is eligible and contains Amazon name and Amazon PAN.

Learn more:

• TDS on E-Commerce Sales – Overview
• Calculate TDS amount for orders and identify TDS adjustments in payment reports
• Downloading annual information statement (Form 26AS)
• Application for NIL/Lower Withholding Certificate
• Obtaining PAN for Individuals and PAN Validation
• Linking PAN with Aadhaar