Budget 2020: Now, Amazon orders to cost more if this amendment is enacted

Your Amazon order or Uber ride will now get a little more expensive if a proposed amendment in the Income Tax Act comes into force. 

The Budget of 2020-21 has proposed the insertion of a new section in the Income Tax Act, Section 194-O. The proposal says tax deducted at source (TDS) is to be paid by an e-commerce operator for sale of goods or provision of service facilitated by the e-commerce portal or platform.

The new section, which is scheduled to come into force from April 1, proposes "to provide that e-commerce operator shall deduct TDS on all payments or credits to e-commerce participants at the rate of 1 per cent in PAN/Aadhaar cases and 5 per cent in non-PAN/Aadhaar cases". 

In order to provide relief to small businessman, it is proposed to provide exemption to an individual and Hindu Undivided Family who receives less than Rs 5 lakh and furnishes PAN/Aadhaar.

"As such, no TDS applies when goods are purchased from a store physically. However, 1 per cent TDS will now be applicable on online purchases. The onus will be on online platforms to deduct such tax," said Gouri Puri, partner at Shardul Amarchand Mangaldas. 

The  provision will impact all kinds of digital businesses, including firms such as Amazon, Flipkart, Oyo, Uber, Ola, Urban Company, MakeMyTrip, Myntra, Zomato, Swiggy and so on.