XY and Co., a partnership firm selling its products 'R' through the digital facility provided by ABC Limited (an E-commerce Operator). On 28 th…

As per section 194-O, ABC Limited, an e-commerce operator is required to deduct tax at source @1% on 4,90,000, being the gross amount of sale of products 'R' of XY and Co., a partnership firm, an e-commerce participant, since such sale of goods is facilitated by ABC Limited through its digital facility. ABC Ltd. is also required to deduct tax @1% on the payment of 60,000 directly made to XY and Co., since such amount is deemed to be amount credited or paid by ABC Ltd. to XY and Co. Thus, ABC Ltd. is required to deduct tax of 5,500, being 1% of 5,50,000. Note – Alternatively, it is possible to assume that the gross amount of sales is 4,90,000 of which - 4,30,000 was paid to e-commerce operator and the balance of 60,000 is directly paid to the XY and Co., a partnership firm by one of the buyers (Mr. Rai). In such case, ABC Ltd. is required to deduct tax@1% on the entire amount of 4,90,000. Thus, ABC Ltd. is required to deduct tax of 4,900, being 1% of 4,90,000.