Revoke TDS deduction for e-commerce firms: IAMAI

NEW DELHI: The Internet and Mobile Association of India (IAMAI) said that the tax deducted at source (TDS) — applicable for all product and service e-commerce firms — needed to be revoked by the government. TDS, which was introduced by through Section 194-0 of the Income Tax (I-T) Act under the Finance Act 2020, mandated a deduction of 1% tax for all e-commerce platforms.
According to the association, withholding such taxation created cash flow irregularities for businesses and small-scale sellers.
It also shared some calculations that highlighted that for small sellers conducting business via e-commerce platforms, TDS will invariably result in excess tax deduction leading to a long cycle of refunds by the end of the fiscal.
Reconciliation of ITC (input tax credit) has proved to be a major challenge under GST and imposing TDS for direct taxes risk replicating that challenge on the direct tax front, IAMAI noted. All such complications raise compliance burden for small sellers and make digital platforms unattractive to conduct business for them, it added.