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E-com firms will have to deduct TCS on payments to suppliers

Press Trust of India  |  New Delhi 

The model has proposed significant changes in taxation of e-commerce business wherein firms like and Snapdeal will have to deduct (tax collected at source) while making payments to their suppliers.

Explaining the changes in the provision, experts said the proposal will increase the compliance burden on e-commerce operators as they will have to deduct 2 per cent and deposit it with the government.


The measure, Nangia & Co Director Rajat Mohan said, will not increase the incidence of taxation on consumers as the supplier will get tax credit for the

The model provides for 1 per cent and a similar amount will have to be levied for inter-state sale of goods under the IGST.

Mohan further said in case of return of goods by the consumer the e-commerce companies will not have to deduct as there is no actual sale.

The draft model law, however, did not provide any definition of aggregators saying that that the government would later come out with a notification specifying which type of businesses would be covered under the word 'aggregator'.

Aggregators mainly include Ola, Uber, Urban Clap which works as a platform for providing transport and other services. The provision will not apply on aggregators.

The E-commerce companies will also have to file returns on the deductions.

The model has defined 'electronic commerce' as supply of goods or services including digital products over electronic network.

'Electronic commerce operator' would mean those persons who own, operate or manage digital or electronic facility or platform for electronic commerce.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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