In a significant move, the Central Board of Direct Taxes (CBDT) has issued comprehensive guidelines clarifying the tax deducted at source (TDS) liability on e-commerce transactions within the Open Network Digital Commerce (ONDC). The guidelines, released on Thursday, assert that the 1% TDS on e-commerce sales will encompass the entire transaction value, inclusive of charges and fees imposed by various e-commerce operators participating in the ONDC network.
Expanding TDS Coverage in ONDC Transactions
The guidelines shed light on the evolving landscape of e-commerce taxation, particularly in the context of the ONDC, which has gained traction with multiple e-commerce platforms and participants transacting through this network. According to the CBDT, TDS liability will extend to cover the gross amount of transactions, encompassing not only the cost of goods and services but also packaging and shipping fees, along with convenience fees imposed by e-commerce platforms on both the buyer and the seller.
The seller side e-commerce operator is mandated to deduct TDS at the time of payment or credit, and subsequently, file the TDS return while issuing a certificate to the seller. The guidelines aim to provide clarity on the taxation framework within the ONDC, signalling the government’s commitment to fostering a network that has the potential to revolutionise e-commerce activities.
Addressing Varied Scenarios and Responsibilities
The guidelines go on to address various scenarios within e-commerce transactions, outlining the TDS liability on the gross transaction amount and emphasising the operators’ responsibility to collect and remit the tax to the government. This clarity is deemed crucial in navigating the complexities of taxation within the ONDC, as the government seeks to encourage a network that breaks barriers in e-commerce activities, fostering seamless transactions between buyers and sellers across platforms.
TDS in the Case of Returned Purchases and Discounts
The guidelines also provide insights into how TDS will apply in cases of returned purchases. TDS is required to be deducted at the time of payment or credit to the seller by the platform, whichever occurs earlier. In instances of purchase returns, where the tax has already been deducted, any refund must be adjusted against the next transaction within the same financial year. The tax deducted and deposited will be allowed as credit to the seller.
Even in scenarios involving discounts provided to sellers by e-commerce operators, the guidelines underscore that the gross amount will be considered for TDS purposes. This approach ensures a comprehensive coverage of TDS within the ONDC, aligning with the government’s vision to facilitate a transparent and efficient digital economy.
As the ONDC continues to gain momentum, these guidelines serve as a roadmap for stakeholders, offering clarity on TDS obligations and responsibilities within this innovative e-commerce framework. The government’s proactive approach toward establishing a robust regulatory framework for the ONDC underscores its commitment to fostering a digitally transformed and interconnected economy.
