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TMI BlogGuidelines 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, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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. 2. Finance Act, 2020 also inserted sub-section (1H) in section 206C of the Act which mandates that with effect from 1st day of October, 2020 a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. 4. Sub-section (4) of section 194-O , sub-section (3) of section 194Q and sub-section (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 Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e client could be the buyer or the seller. Participants in the auctions are sellers (if client is buyer) or buyers (if client is seller). The transaction of sale/purchase is being carried out directly between the buyer and the seller which are not done through the electronic portal of the e-auctioneer. Further, the price so discovered can be further negotiated between the parties without the knowledge of the e-auctioneer, in such a scenario, it has been represented that provisions of section 194-O of the Act does not apply as the transaction of sale/purchase itself is not taking place through the electronic portal. 5.1.2 From the representations made, the following facts have been noticed: (a) The e-auctioneer conducts e-auction services fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. This clarification shall not apply if any of these facts are not satisfied. Further, it is clarified that the buyer and seller would still be liable to deduct/ collect tax as per the provisions of section 194Q and 206C (1H) of the Act, as the case may be. 5.2 Adjustment of various state levies and taxes other than GST 5.2.1 In Para 4.3.2 of circular no. 13 of 2021 dated 30.06.2021 , it has been provided that in case the GST component has been indicated separately in the invoice and tax is deducted at the time of credit of the amount in the account of the seller, then the tax is to be deducted under section 194Q of the Act on the amount credited without including such GST. It has been further provided that in case the tax is deducted on p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchase returns, the clarification as provided in Para 4.3.3 of circular no. 13 of 2021 shall also apply to purchase return relating to non GST products liable to VAT/excise duty/sales tax/ CST etc. 5.3 Applicability of section 194Q of the Act in cases where exemption has been provided under section 206C (1A) of the Act 5.3.1 Sub-section (1A) of section 206C of the Act provides that notwithstanding anything contained in sub-section (1) of the said section, no tax is to be collected in case of a buyer, who is a resident in India, if such buyer furnishes to the person responsible for collecting tax. a declaration to the effect that the goods (as referred to in sub-section (1)) are to be utilized for the purposes of manufacturing, process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4Q in case of department of Government not being a public sector undertaking or corporation 5.4.1 There have been representations from department of the Government (both Central Government and State Government), to enquire if such department is required to deduct tax under the provisions of section 194Q of the Act. 5.4.2 As per the provisions of section 194Q. tax is to be deducted by a person, being a buyer, whose total sales, gross receipts or turnover from business carried on by that person exceed ten crore rupees during the financial year immediately preceding the financial year in which the goods are purchased by such person. Thus, for a person to be considered as a buyer for the purposes of section 194Q of the Act. following conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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