When does an e-commerce operator deduct 194-O?
When an e-commerce operator deducts 0.1 per cent on the gross sales it routes to a seller, the five-lakh exemption for a resident individual or HUF with PAN on file, the 5 per cent no-PAN floor, how it differs from GST TCS, and why section 194-O now reads as section 393(1) Sl. 8(v).
In this guide
An e-commerce operator deducts 0.1 per cent on the gross amount of sales of goods or services it facilitates for an e-commerce participant, before commission is netted off. A resident individual or HUF seller is exempt up to five lakh rupees a year with PAN on file; without PAN the rate is 5 per cent. From April 2026 this sits in section 393(1) table sl. no. 8(v) of the Income-tax Act, 2025.
What does section 194-O TDS cover?
When a seller lists on a marketplace and the platform routes the buyer's payment, the platform is an e-commerce operator and the seller is an e-commerce participant. Section 194-O made the operator deduct tax on the gross amount of the sale of goods or services it facilitates. The deduction runs on the gross figure, before the platform's commission and other fees are netted off.
It was section 194-O of the Income-tax Act, 1961. From 1 April 2026 the same rule reads as section 393(1) table sl. no. 8(v) of the Income-tax Act, 2025. The rate, the participant exemption and the mechanics carry over; the section number changed. The buyer-side purchase-of-goods deduction sits in the same table at sl. no. 8(ii).
What is the section 194-O TDS rate?
The rate is 0.1 per cent of the gross amount of the sale, reduced from an earlier 1 per cent. It is deducted at the time the amount is credited to the participant's account or paid, whichever is earlier. A payment made by the buyer directly to the participant, but through the platform, is treated as an amount the operator facilitated for this purpose.
Does 194-O run on the amount credited or the amount paid?
Whichever is earlier. If the operator credits the seller's ledger on T+2 and pays out a week later, the 0.1 per cent is due on the credit date. Waiting for the bank payout understates the timing, not only the base.
Who gets the 194-O five-lakh exemption?
A resident individual or Hindu undivided family gets a cushion: no deduction where gross sales through the operator do not exceed five lakh rupees in the financial year, and PAN or Aadhaar has been furnished. A company, LLP or firm does not get this cushion and is deducted from the first rupee. Cross five lakh, and the operator deducts on the whole gross amount, not only the excess.
Does the five-lakh limit apply per marketplace or in total?
Per operator. The exemption is tested on gross sales through that e-commerce operator in the financial year. Selling Rs 4 lakh on one platform and Rs 4 lakh on another can still sit under five lakh on each operator, which is why the PAN-on-file condition is checked per platform.
What is the 194-O no-PAN rate?
If the participant has not furnished PAN or Aadhaar, the rate is 5 per cent, not the general 20 per cent no-PAN rate that other TDS provisions use. The five-lakh exemption for a resident individual or HUF also does not apply once PAN or Aadhaar is missing, because the exemption is conditioned on it being on file.
Is 194-O the same as GST TCS?
No. A marketplace seller often sees two deductions on the same sale, and they are different taxes.
| Section 194-O / 393 TDS | GST TCS (section 52) | |
|---|---|---|
| Law | Income-tax Act | CGST Act |
| Rate | 0.1 per cent | 0.5 per cent |
| Base | Gross amount of sale | Net value of taxable supplies |
| Shown in | Form 26AS | GST electronic cash ledger |
Does section 194-O now sit in 393?
Yes. The e-commerce operator deduction that was section 194-O of the 1961 Act reads, from 1 April 2026, as section 393(1) table sl. no. 8(v) of the Income-tax Act, 2025. The 0.1 per cent rate, the five-lakh resident-individual exemption, and the operator's duty carry over.
How do I confirm the 194-O rate?
- Read section 393 for the TDS table as it reads from April 2026, and find sl. no. 8(v).
- Cross-check the rate and code on the Income Tax Department section 393 page.
- Confirm the credit as a seller in Form 26AS and AIS on the e-Filing portal.
- For the buyer-side deduction on purchases of goods, read the 194Q guide.
Why is 194-O TDS calculated wrongly?
- Confusing 194-O income-tax TDS with GST TCS. They are different taxes at different rates on different bases.
- Assuming the five-lakh exemption covers a company or LLP seller. It is only for a resident individual or HUF.
- Expecting the general 20 per cent no-PAN rate. The floor here is 5 per cent.
- Netting commission before deducting. The 0.1 per cent runs on the gross amount of the sale.
Where are 194-O rate changes notified?
TDS rates and codes move through CBDT notifications and the annual Finance Act, as the cut from 1 per cent to 0.1 per cent did. Complied AI keeps CBDT updates in one feed so you can open the source behind a rate change, then read section 393 next to it.
Practical checks
Common questions
Who deducts TDS on my Amazon or Flipkart sales?
The e-commerce operator, meaning the platform that owns or manages the digital facility and pays the seller. Amazon, Flipkart, Meesho and similar operators deduct under section 194-O on the gross amount of the sale they route to a seller, before commission and other fees are taken off. The seller does not deduct on its own sale. From 1 April 2026 the same rule is section 393(1) table sl. no. 8(v).
What is the TDS rate under section 194-O right now?
0.1 per cent of the gross amount of the sale of goods or services facilitated through the platform. The rate was reduced to 0.1 per cent from an earlier 1 per cent. Where the seller has not furnished PAN or Aadhaar, the rate rises to 5 per cent, not the usual 20 per cent no-PAN floor that other TDS provisions use. Confirm sl. no. 8(v) of the section 393 table from April 2026.
I sold Rs 4 lakh on one marketplace this year. Is 194-O deducted?
Not if you are a resident individual or Hindu undivided family and PAN or Aadhaar is on file. That class is exempt up to five lakh rupees of gross sales through the operator in the financial year. A company, LLP or firm is deducted from the first rupee; the five-lakh cushion is only for a resident individual or HUF. Cross five lakh and the operator deducts on the whole gross amount, not only the excess.
Is the 0.1 per cent 194-O deduction the same as GST TCS?
No. Section 194-O is an income-tax deduction shown in Form 26AS, at 0.1 per cent on gross sales. GST TCS under section 52 of the CGST Act is a separate collection at 0.5 per cent on the net value of taxable supplies. A marketplace seller can see both on the same transaction; they are different taxes under different laws, at different rates, on different bases.
The operator netted commission first, then deducted 0.1 per cent. Is that right?
No. Section 194-O runs on the gross amount of the sale the operator facilitates, before commission and other fees are netted off. Deducting 0.1 per cent on the net payout understates the TDS. Ask the operator to recompute on the gross figure and check the credit in Form 26AS against that gross, not against the amount that landed in the bank.
I did not give PAN. Is the no-PAN rate 20 per cent here too?
No. If the e-commerce participant has not furnished PAN or Aadhaar, the section 194-O rate is 5 per cent, not the general 20 per cent no-PAN rate that other TDS provisions use. The five-lakh exemption for a resident individual or HUF also drops once PAN or Aadhaar is missing, because that exemption is conditioned on it being on file.
Did section 194-O disappear in the Income-tax Act, 2025?
No. The e-commerce operator deduction that was section 194-O of the 1961 Act reads, from 1 April 2026, as section 393(1) table sl. no. 8(v) of the Income-tax Act, 2025. The 0.1 per cent rate, the five-lakh resident-individual exemption, and the operator's duty carry over. The buyer-side purchase-of-goods deduction sits in the same table at sl. no. 8(ii).
Publication method
How this guide was prepared
This guide is published by the Complied AI research desk. Its source list and stated position were checked against the official records shown below on 1 September 2026.
Automation, including AI, may assist research, drafting and structure. It does not replace the official record or amount to an independent professional review. Read our editorial standards and corrections policy.
Verification path
Official sources used
Keep reading
Related guides
- How-to · TaxIs the new tax regime the default for AY 2026-27?The new tax regime under section 115BAC is the default from AY 2024-25. AY 2026-27 slabs, the Rs 60,000 rebate up to Rs 12 lakh, Form 10-IEA for business income, and which deductions still survive.
- How-to · TaxHow does section 54 exempt house-sale capital gains?How an individual or HUF exempts the capital gain on selling a residential house by buying or building another, the one-year-before to two-year-after purchase window, the three-year construction window, the Capital Gains Account Scheme, and the two-crore lifetime option for two houses.
- How-to · TaxWhat is the difference between Form 16 and Form 16A?What Form 16 certifies, what Form 16A certifies, who issues each one from TRACES, the 31 May annual due date for Form 16, the fifteen-day quarterly due date for Form 16A, and why a missing certificate does not block the ITR claim.