CBDT regulations regarding ecomm players’ 1% tax

Guidelines for the deduction of 1% income tax from the gross amount of sales of goods or services by e-commerce enterprises within a multiple-operator model framework were released by the Central Board of Direct Taxes (CBDT) on Thursday.

According to Section 194-O of the Income Tax Act, 1961 (the “Act”), an e-commerce operator is required to deduct income tax at the rate of one percent of the gross amount of sales of goods or services, or both, that are made possible by their digital or electronic platform or facility.

“Circular guidelines have been issued for the removal of difficulties and clarity has been provided on various issues on the applicability of the Act in a multiple e-commerce operator model framework, such as the Open Network for Digital Commerce (ONDC),” said a statement from CBDT. The circular clarifies a number of topics and offers examples of different circumstances.