ONDC lauds CBDT’s 1% tax deduction rule for e-commerce

• ByStartupStory     |    January 3, 2024

The Open Network for Digital Commerce (ONDC) has expressed appreciation for the recent Central Board of Direct Taxes (CBDT) guidelines introducing a 1% income tax deduction on the total sales facilitated by e-commerce firms within a multi-operator model framework. These guidelines under Section 194-O of the Income Tax Act, 1961, mandate a 1% deduction on the gross amount from goods or services sold via digital platforms.

According to ONDC, these guidelines bring clarity to participants within the ONDC ecosystem, ensuring a comprehensive understanding and adherence to tax obligations. The framework aims to simplify operations and enhance compliance for digital transactions, particularly in cases involving multiple entities within the digital commerce network.

ONDC stated, “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.”

The CBDT, in a statement, highlighted the purpose of their circular guidelines: “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.”

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