If you sell on Amazon, Flipkart, Meesho, Zomato or any other marketplace, the platform must cut TDS under Section 194O of the Income-tax Act before paying you. Since 1 October 2024 the rate is just 0.1 percent of your gross sales (down from 1 percent), and small resident individual sellers with gross sales of Rs 5 lakh or less through that platform pay nothing at all. The TDS that is cut is not a cost. It shows up in your 26AS and AIS and you claim it back, rupee for rupee, when you file your ITR.
Seller checklist - are you liable, how much is cut, how to get it back?
| Period / situation | TDS rate on gross sales | Authority |
|---|---|---|
| 1 Oct 2020 to 30 Sep 2024 | 1 percent | Section 194O, Finance Act 2020 |
| From 1 Oct 2024 onwards | 0.1 percent | Finance (No. 2) Act 2024 |
| Seller has NOT furnished PAN or Aadhaar | 5 percent | Section 206AA |
| Resident individual or HUF, gross sales up to Rs 5 lakh, PAN or Aadhaar given | Nil | Section 194O(2) |
The 0.1 percent rate applies to the full gross amount of your sales of goods, services, or both - not your profit. That is why even a thin-margin seller often sees the TDS cut exceed the actual tax due, and gets a refund.
Section 194O was inserted by the Finance Act 2020 and took effect on 1 October 2020. It puts the deduction duty on the e-commerce operator - the platform that facilitates the sale - and not on you, the seller (the “e-commerce participant”).
The operator must deduct at the time it credits the sale amount to your account or pays you, whichever is earlier, on the gross amount of the sale. A direct payment a buyer makes to you for a platform-facilitated sale is also treated as routed through the operator, so it counts too. Section 194O covers resident e-commerce participants.
The rate was 1 percent from the start. The Finance (No. 2) Act 2024 cut it to 0.1 percent with effect from 1 October 2024 to ease the working-capital strain on small online sellers. Being a TDS provision, it is regime-neutral - it applies under both the old and new tax regimes.
If a marketplace is not deducting when it should, a public-information request to the regulating authority can clarify the compliance position. The AI RTI Drafter helps you frame a clean, answerable question.
This is the part most sellers get wrong. Under Section 194O(2), an operator need not deduct any TDS if both of these are true:
Two traps to avoid:
It is a cliff, not a free slab. Rs 5 lakh is not a tax-free band. The moment your gross sales through the operator cross Rs 5 lakh, the 0.1 percent applies to the entire gross amount from the first rupee, not just the portion above Rs 5 lakh. So a seller at Rs 5,10,000 has TDS on the full Rs 5,10,000, not on Rs 10,000.
The threshold is per operator. If you sell on Amazon, Flipkart and Meesho, each operator applies the Rs 5 lakh test separately to your sales on its own platform. You do not add them up across platforms for this exemption.
If you do not give your PAN or Aadhaar, the Rs 5 lakh relief is gone and Section 206AA forces a 5 percent cut - so always keep your PAN or Aadhaar updated in your seller account.
Worked example - Priya, a Meesho seller
Priya runs a small saree business and sells only on Meesho. In FY 2025-26 her gross sales on Meesho are Rs 7,00,000. Because she crossed Rs 5 lakh, Section 194O applies to the whole Rs 7,00,000, not just the excess.
TDS at 0.1 percent = Rs 700, cut by Meesho across the year and deposited against Priya's PAN.
When Priya files her ITR, her business profit after expenses puts her total tax at, say, Rs 300. She claims the full Rs 700 credit shown in her 26AS. Her tax of Rs 300 is adjusted and the remaining Rs 400 is refunded to her bank account. The TDS cost her nothing - it was only an advance.
The deducted TDS is your money held against your PAN. To recover it:
There is no separate “194O refund application” - it is claimed inside the normal return. For deadlines on any related information request, the Timeline Tracker and PIO Reply Checker help.
The e-commerce operator (Amazon, Flipkart, Meesho, Zomato and similar platforms) deducts and deposits it against your PAN. As the seller you only keep your PAN or Aadhaar updated and claim the credit later.
0.1 percent of gross sales from 1 October 2024. It was 1 percent from 1 October 2020 to 30 September 2024. Without PAN or Aadhaar on file, the operator must deduct 5 percent under Section 206AA.
No, if you are a resident individual or HUF and have furnished PAN or Aadhaar to that operator. But if your sales on that platform cross Rs 5 lakh in the year, TDS applies to the entire gross amount, not just the part above Rs 5 lakh.
No. Each operator applies the Rs 5 lakh test only to sales on its own platform. Amazon, Flipkart and Meesho are not added together for this exemption.
Check it in Form 26AS and the AIS on incometax.gov.in, then claim it in your ITR against your final tax. If the TDS is more than your tax, the balance is refunded to your bank account.
No. It is a TDS provision and regime-neutral - the deduction and the Rs 5 lakh relief work the same under both regimes.
Your credit flows from the operator's TDS return. Raise a ticket with the platform to correct its filing, and reconcile early - well before your ITR due date.
Related reading and tools: First Appeal Builder | The RTI Playbook | RTI Act, 2005