Section 194-O TDS at 0.1% for Sellers 2026

A single marketplace sale triggers two separate withholdings under two separate statutes. Section 52 of the CGST Act is GST, collected at 0.5 per cent on net taxable supplies, reported by the operator in GSTR-8, and credited to your electronic cash ledger. Section 194-O is income tax, deducted at 0.1 per cent on gross sales, reported in the operator's TDS return, and credited in Form 26AS.

They differ in rate, in base, in the return that reports them, in the ledger they land in, and in the tax they can be set against. A reconciliation that adds them together as one deduction is wrong, and it is the single most common structural error we find in e-commerce books.

Two carve-outs matter and both are routinely missed. A resident individual or HUF selling through a platform is exempt where the gross amount of sales through that operator does not exceed Rs 5 lakh in the financial year and PAN or Aadhaar has been furnished. For companies, firms, LLPs and every other entity there is no threshold at all, and deduction runs from the first rupee.

Non-resident e-commerce participants are outside the scope of the provision entirely, which is a separate regime.

The PAN point carries a specific consequence. Where a participant has not furnished PAN or Aadhaar, deduction is at 5 per cent under the proviso to Section 206AA, rather than the 20 per cent that applies to most other payments. Five per cent on gross sales is still a very large cash-flow cost, and it is entirely avoidable.

The base is the gross amount of the sale of goods or provision of services facilitated through the platform. It is not reduced by commission, by fulfilment fees, or by returns in the way the GST TCS base is.

This produces a useful control. Because 194-O runs on gross facilitated value, the deduction in Form 26AS should approximate 0.1 per cent of gross sales for the year. A material divergence usually means either that some sales are not being reported against your PAN, or that the operator is still deducting at the old rate.

The Income-tax Act, 2025 applies from 1 April 2026. The e-commerce withholding obligation carries forward at the same rate, codified at Section 393(1), Sl. 8(v) with payment code 1035.

The non-PAN deduction floor also carries forward. Where the seller has not furnished a PAN, a higher deduction rate applies under what is now Section 394A, the successor to the old Section 206AA. For a marketplace seller this is a strong practical reason to make sure the PAN on every platform account is correct and active.

Pull Form 26AS for the financial year and isolate the deductions made by each e-commerce operator.

Compare each against 0.1 per cent of the gross facilitated sales you have recorded for that platform.

Investigate any operator still deducting at 1 per cent, because the excess is recoverable through your return but should not be recurring.

Check that every platform account carries the correct PAN, since a mismatch means the credit is reported against nobody.

Claim the credit in the income-tax return, entirely separately from the GST TCS position.

It is 0.1 per cent of the gross amount of sales facilitated through the e-commerce operator, reduced from 1 per cent with effect from 1 October 2024 by the Finance (No. 2) Act, 2024. Under the Income-tax Act, 2025 the same obligation continues at 0.1 per cent.

Section 194-O is income tax on gross sales at 0.1 per cent, credited in Form 26AS and set against income-tax liability. Section 52 is GST on net taxable supplies at 0.5 per cent, credited to the electronic cash ledger and set against output GST. Different statutes, different bases, different ledgers, and they must never be netted.

In Form 26AS for the relevant financial year, reported by each e-commerce operator against your PAN. It is worth pulling Form 26AS at least half-yearly rather than only at return time, because errors in the PAN recorded on a platform account are far easier to fix before the operator's return is filed.

No. The obligation is carried forward at the same 0.1 per cent, codified at Section 393(1), Sl. 8(v) at payment code 1035. The section number changes, the substance does not, and no change to your compliance behaviour is required beyond quoting the correct provision.

The excess is not lost, since all tax deducted against your PAN is claimable as credit in your income-tax return. It is a cash-flow cost rather than a permanent one, but it should be raised with the operator, because a platform still applying the pre-October-2024 rate is systematically over-withholding.

Yes, but only for resident individuals and HUFs. Where the gross amount of sales through the operator does not exceed Rs 5 lakh in the financial year and PAN or Aadhaar has been furnished, no deduction is required. Companies, firms and LLPs have no threshold and deduction applies from the first rupee.

Deduction jumps to 5 per cent under the proviso to Section 206AA, rather than the 20 per cent that applies to most other payments. On Rs 50 lakh of annual sales that is Rs 2.5 lakh locked up until you claim it in your return, so furnishing PAN or Aadhaar on every platform account is the single cheapest fix available.