The Indian government has announced a TDS rate reduction by 25% for ecommerce, as part of the economic stimulus package.
According to Economic Times Tech, the 25% reduction in tax deducted at source (TDS) on ecommerce participants will benefit merchants or sellers, providing them with more working capital.
However, sellers and ecommerce marketplaces still declare that the TDS levy should be removed altogether as it will lock up liquidity and add to compliance costs, adding that the government should also clarify whether the deduction will be on gross or net sales.
Moreover, industry insiders stated that the relaxations would not lead to any substantial immediate benefit for online sellers. For example, Snapdeal and the All India Online Vendors Association (AIOVA) welcomed the TDS rate reduction on commissions from 5% to 3.75%, but still sought for more aid from the government to help drive a robust recovery of the sector.
The government will start charging TDS on ecommerce participants from October 1.
Rohinton Sidhwa, partner at Deloitte India, said TDS reduction from 1% to 0.75% would make ecommerce platforms more attractive for sellers as they will pay a lower rate, that too for only half of the ongoing financial year, to the tax authorities.
“The reduction in withholding taxes across the board is probably a recognition that income of most taxpayers stands reduced due to the shutdown due to Covid-19,” he said.
„Tendinţele pe care le-am remarcat înainte de începerea pandemiei s-au accelerat pe perioada stării de urgenţă. Am văzut acest lucru ca o oportunitate, un tipping point pentru bancă. Post-pandemie nu avem cum sa ne întoarcem la comportamentul financiar pe care îl aveam până în februarie a.c. Relaţia românilor cu online-ul s-a schimbat. In plus, cardul fizic se va dematerializa. Vom asista la o scădere a cererii pentru cardurile fizice, respectiv la o creştere a preferinţei pentru componenta digitală a acestora.”