ONDC welcomes CBDT guidelines on 1% income tax deduction for ecommerce operators

As per Section 194-O of the Income Tax Act, 1961, ecommerce operators are required to deduct an income tax of 1% on the gross amount from the sale of goods or provision of services, or both, facilitated through their digital/electronic facility or platform.

ONDC welcomes CBDT guidelines on 1% income tax deduction for ecommerce operators

Wednesday January 03, 2024,

2 min Read

Open Network For Digital Commerce (ONDC)has welcomed the recent guidelines issued by the Central Board of Direct Taxes (CBDT) on the 1% income tax deduction on the total amount of goods or services sold by ecommerce firms operating within a multiple-operator model framework.

These guidelines, according to ONDC, will provide clarity for participants in the ONDC ecosystem, ensuring a clear understanding and adherence to tax implications.

As per Section 194-O of the Income Tax Act, 1961, ecommerce operators are required to deduct income tax at the rate of 1% on the gross amount from the sale of goods or provision of services, or both, facilitated through their digital/electronic facility or platform.

“We believe that by providing clarity on the application of Sec 194-O to network models of digital trade where multiple ecommerce entities are involved, these guidelines will contribute to the ease of doing business on the ONDC network and strengthen the compliance framework for digital transactions,” ONDC said in a statement. 

“CBDT Circular guidelines have been issued for removal of difficulties and clarity has been provided on various issues pertaining to applicability of Section 194-O of the Act in a multiple ecommerce operator model framework, such as the Open Network for Digital Commerce,” said CBDT in a statement.

The circular also elaborates various situations with examples, offering clarity on several issues. In response to representation from numerous quarters, it has been updated to include frequently asked questions.


Edited by Swetha Kannan