Guidelines under section 194-O, 194Q and 206C
Guidelines under sub-section (4) of section 194-O, sub-section (3) of section 194Q and subsection (1-I) of section 206C of the Income-tax Act, 1961.
Finance Act, 2020 inserted a new section 194-0 in the Income-tax Act 196 1 (hereinafter referred to as ” the Act”) which mandates that with effect from 1st day of October, 2020, an e-commerce operator shall deduct income-tax at the rate of one per cent of the gross amount of sale of goods or provision of services or both, facilitated through its digital or electronic facility or platform. However, exemption from the said deduction has been provided in case of certain individuals or Hindu undivided family subject to fulfilment of specified conditions. This deduction is required to be made at the time of credit of the amount of such sale or service or both to the account of an e-commerce participant or at the time of payment thereof to such e-COmmerce participant, whichever is earlier.
- Finance Act, 2020 also inserted sub-section ( H-1 ) in section 206C of the Act which mandates that with effect from I” day of October, 2020 a seller receiving an amount as consideration for sale of any goods of the va lue or aggregate of such value exceeding fifty lakh rupees in any previous year shall collect from the buyer, a sum equal to 0. 1 per cent of the sale consideration exceeding fifty lakh rupees as income-tax. The collection is required to be made at the time of receipt of amount of sale consideration. Seller is defined as the person whose total sales or gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the sale of good is carried out. Central Government has been authorised to specify by notification in the Official Gazette, the person who would not be considered as seller for the purposes of this section, subject to the fulfillment of certain conditions as specified therein.
- Finance Act, 202 1 inserted a new section 194Q to the Act which took effect from 1st day of July, 2021. It applies to any buyer who is responsible for paying any sum to any resident seller for purchase of any goods or the value or aggregate of value exceeding fifty lakh rupees in any previous year. The buyer, at the time of credit of such sum to the account of the seller or at the time of payment, whichever is earlier, is required to deduct an amount equal to 0. 1 % of such Sum exceeding fifty lakh rupees as income tax. Buyer is defined to be person whose total sales or gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is carried out. Central Government has been authorised to specify by notification in the Official Gazette, person who would not be considered as buyer for the purposes of this section, subject to fulfillment of specified conditions.
- Sub-section (4) of section 194-0, sub-section (3) of section 194Q and sub-secti on ( 1-I) of section 206C of the Act empowers the Board (with the approval of the Central Government) to issue guidelines for the purpose of removing difficulties.
4.1 In this regard, vide circular no. 17 of 2020 dated 29.09.2020, guidelines were issued by the Board (with the approval of the Central Government) in relation to the provisions of section 194-0 and section 206C( 1 H) of the Act in certain cases to remove difficulties and provide clarity for certain transactions.
4.2 Further, vide circular no. 13 of 2021 dated 30.06.202 1, guidelines were issued by the Board in relation to the provisions of section 194Q of the Act through which the difficulties arising from the applicability of the provisions of section 194Q in certa in cases were removed. Furthermore, guidelines with respect to the cross application of the provisions of sections 194-0, 194Q and 206C ( I H) of the Act were also issued through the said circular.
4.3 In continuation of the above, to further remove the difficulties, the Board, with the approval of the Central Government, hereby issues the following guidelines under sub-section (4) of section 194-0, subsection (3) of section 194Q and sub-section (I-I) of section 206C of the Act. - Guidlines
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