Budget 2024: FM Proposes To Reduce TDS Rate For E- Commerce Operators from 1% to 0.1% [Read Bill]

The Union Finance Minister Nirmala Sitharaman presented the Union Budget 2024 today before the parliament at 11 AM. The FM proposed to reduce the rate of Tax Deducted At Source ( TDS ) for E- Commerce Operators.

TDS is a direct tax mechanism that collects tax at the source of income itself rather than collecting taxes as an annual lump sum. That is, the tax is deducted at the time of payout itself.

Section 194O of the Income Tax Act 1961 deals with the TDS on payment made to E-Commerce operators. E-Commerce operators are the owners of the digital platforms that host the trade of goods and services. They manage the platform which is utilized by e-commerce participants to engage in buying and selling. Under this section E- Commerce operators are liable to deduct TDS at the rate not exceeding 1% from the e-commerce participants when the gross sales rise above Rs. 5 lakhs.

In the new budget the FM has proposed to lower this rate from 1% to 0.1%. The minister has also proposed to decriminalize the delay of payment of TDS up to the due date of filing statements for the same. There are also plans to craft a standard of procedure for TDS defaults so that the guidelines for such defaults are easy to follow. The Minister further announced to establish E-Commerce export centers to encourage online trading.

India’s E-Commerce exports currently totals at 2 billion dollars. It is predicted that this could reach 350 billion dollars by 2030 as the potential for growth in this area is enormous. The new proposals are made envisaging such exponential growth.

To Read the full text of the Order CLICK HERE

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