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+{{htmlmetatags>metatag-description=(Section 194O TDS for online sellers: rate cut to 0.1 percent from Oct 2024, the Rs 5 lakh exemption for small sellers, and how to claim the credit in your ITR.)&metatag-keywords=(section 194O, TDS e-commerce, online seller TDS, 194O rate 0.1 percent, claim TDS credit ITR)&metatag-robots=(index,follow)&metatag-og:title=(Section 194O TDS for Online Sellers: Rate, Rs 5 Lakh Exemption, Credit)&metatag-og:description=(Section 194O TDS for online sellers: rate cut to 0.1 percent from Oct 2024, the Rs 5 lakh exemption for small sellers, and how to claim the credit in your ITR.)&metatag-og:type=(article)}}
+====== Section 194O TDS for Online Sellers: Rate and How to Claim ======
+{{ :social:auto:section-194o-tds-ecommerce-online-sellers-india.png?direct&1200 |Section 194O TDS for Online Sellers: Rate and How to Claim — RTI Wiki}}
+<WRAP center round info 95%>
+**Quick Reply:** Section 194O TDS for online sellers: rate cut to 0.1 percent from Oct 2024, the Rs 5 lakh exemption for small sellers, and how to claim the credit in your...
+</WRAP>
+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.
+<WRAP info>
+**Seller checklist - are you liable, how much is cut, how to get it back?**
+  - **Am I liable?** If you are a resident seller on an online marketplace, yes - the operator (Amazon, Flipkart, etc.) deducts, not you. The Rs 5 lakh relief is only for resident individuals and HUFs who have given their PAN or Aadhaar.
+  - **How much is cut?** 0.1 percent of your gross sales from 1 October 2024 (it was 1 percent before). No PAN or Aadhaar on file? The operator must cut 5 percent under Section 206AA.
+  - **How do I get it back?** You do not "apply" to the operator. The deducted TDS is your tax credit. Check it in Form 26AS and the AIS, then claim it in your income-tax return against your final tax. If your tax is lower than the TDS cut, the balance is refunded.
+</WRAP>
+===== Section 194O rate table at a glance =====
+^ 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.
+===== The rule: what Section 194O actually says =====
+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 [[https://righttoinformation.wiki/tools/ai-rti-draft-app.html|AI RTI Drafter]] helps you frame a clean, answerable question.
+===== The Rs 5 lakh exemption - how it really works =====
+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:
+  - You are a **resident individual or HUF**, and
+  - Your **gross sales through that operator** in the financial year do **not exceed Rs 5 lakh**, and
+  - You have **furnished your PAN or Aadhaar** to the operator.
+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.
+<WRAP center round box>
+**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.
+</WRAP>
+===== Claiming the Section 194O credit in your ITR =====
+The deducted TDS is your money held against your PAN. To recover it:
+  - **Check Form 26AS and the AIS** on incometax.gov.in. Section 194O deductions appear with the operator as deductor and your gross sale value as the amount.
+  - **Reconcile against your sales.** Match the gross figures with your platform settlement reports. If a figure is missing or wrong, raise it with the operator - your credit flows from their TDS return.
+  - **Report the income, then claim the TDS.** File the correct ITR (usually ITR-3 or ITR-4 for business income), show your e-commerce turnover as business income, and enter the 194O TDS in the TDS schedule so it is set off against your tax.
+  - **Get the refund.** If the TDS cut exceeds your final tax - common for small or thin-margin sellers - the difference is refunded with interest where due.
+There is no separate "194O refund application" - it is claimed inside the normal return. For deadlines on any related information request, the [[https://righttoinformation.wiki/tools/timeline-calculator-app.html|Timeline Tracker]] and [[https://righttoinformation.wiki/tools/pio-reply-checker-app.html|PIO Reply Checker]] help.
+===== Common mistakes =====
+  - **Treating TDS as a loss** - it is a prepaid tax credit, fully claimable in your ITR.
+  - **Assuming Rs 5 lakh is tax-free** - crossing it makes the whole gross amount liable, from rupee one.
+  - **Adding platforms together** - the Rs 5 lakh test is applied per operator.
+  - **No PAN or Aadhaar on file** - that triggers a 5 percent cut under Section 206AA, not 0.1 percent.
+  - **Skipping the return because income is small** - you may forfeit the refund of TDS already cut.
+===== Frequently asked questions =====
+==== Who deducts the TDS - me or the platform? ====
+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.
+==== What is the current Section 194O TDS rate? ====
+.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.
+==== I sell less than Rs 5 lakh on one platform. Will TDS be cut? ====
+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.
+==== Does the Rs 5 lakh limit cover all my marketplaces together? ====
+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.
+==== How do I get the deducted TDS back? ====
+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.
+==== Does Section 194O depend on the old or new tax regime? ====
+No. It is a TDS provision and regime-neutral - the deduction and the Rs 5 lakh relief work the same under both regimes.
+==== TDS was cut but it is missing from my 26AS. What do I do? ====
+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.
+===== Sources =====
+  - Section 194O, Income-tax Act 1961 - effective 1 October 2020 (Finance Act 2020): https://incometaxindia.gov.in
+  - Memorandum explaining the provisions of the Finance (No. 2) Bill 2024 - rate cut to 0.1 percent from 1 October 2024: https://taxo.online/wp-content/uploads/2024/07/memo.pdf
+  - Section 206AA, Income-tax Act 1961 - 5 percent where PAN or Aadhaar not furnished: https://incometaxindia.gov.in
+  - CBDT guidelines under Section 194-O and 206C(1H): https://www.indiafilings.com/learn/guidelines-for-section-194-o-and-section-206c-1-i-of-income-tax-act-1961
+  - Income-tax e-filing portal (Form 26AS, AIS, ITR): https://www.incometax.gov.in
+----
+**Related reading and tools:** [[https://righttoinformation.wiki/tools/first-appeal-app.html|First Appeal Builder]] | [[https://righttoinformation.wiki/book|The RTI Playbook]] | [[:act|RTI Act, 2005]]
+{{tag>itr tds section sellers rate claim}}