IT department clarifies applicability of TDS liability for ONDC retailers
By MYBRANDBOOK
The income tax department has clarified the applicability of TDS liability of e-retailers trading through the government's ONDC initiative. As per the Central Board of Direct Taxes, a 1% TDS will have to be deducted from the gross sale amount after including convenience/ packaging/shipping fees as charged by ecommerce trading platforms for the order placed on ONDC. Every ecommerce operator is required to deduct TDS at the rate of 1% of the sales amount.
Given that ONDC, the Open Network for Digital Commerce, is a recent initiative by the Department for Promotion of Industry and Internal Trade (DPIIT), the CBDT has received representations seeking clarification on the entity responsible for Tax Deducted at Source (TDS) compliance under income tax laws.
The CBDT has clarified that in a scenario where multiple e-commerce operators (ECOs) are involved in a single transaction through the ECO platform, the responsibility for TDS compliance lies with the supplier, who ultimately disburses the payment to the supplier.
Established on December 31, 2021, ONDC operates as a Section 8 company. It represents an initiative by the DPIIT to establish a facilitative model aiding small retailers in leveraging digital commerce. Unlike an application, platform, intermediary, or software, ONDC is a set of specifications designed to promote open, unbundled, and interoperable open networks.
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