TDS 194O for Ecommerce Sellers: Rate, Form 26AS and Your ITR
Section 194-O makes an e-commerce operator such as Amazon, Flipkart or Meesho deduct income tax at 0.1% of your gross sales before it pays you. It is not an extra cost. It is tax paid in advance in your name, shown in Form 26AS, and you adjust it or get it refunded when you file your return.
- The rate is 0.1% of the gross amount of sales or services made through the platform.
- Individuals and HUFs with gross sales up to Rs 5 lakh through that operator in the year, who have given PAN or Aadhaar, face no deduction.
- Without a valid PAN, the rate jumps to 5%.
- From tax year 2026-27 the same rule sits in section 393 of the Income-tax Act, 2025.
- This is income tax. It is separate from the 0.5% TCS under GST.
In this guide
What is TDS under section 194-O?
TDS means tax deducted at source. The person paying you holds back a small part and deposits it with the Income Tax Department against your PAN.
Under section 194-O of the Income-tax Act, 1961, an e-commerce operator must deduct this tax when it facilitates a sale of goods or services by an e-commerce participant. The operator is the person who owns, operates or manages the digital platform. The participant is you, a person resident in India selling through it.
The tax is deducted when the operator credits the amount to your account or pays you, whichever comes first. If a buyer pays you directly for an order placed on the platform, the law treats that amount as paid by the operator, so it is counted too.
What is the rate and who is exempt?
The rate is 0.1% of the gross amount. The Income Tax Department's rate chart for the year shows 0.1 against section 194-O. The rate was 1% earlier. It is widely reported that the cut to 0.1% took effect from 1 October 2024 through the Finance (No. 2) Act, 2024. We could not open the gazette copy today, so check that date if you are working on older periods.
There is no deduction if all three of these are true:
- you are an individual or a Hindu Undivided Family (HUF),
- your gross sales through that operator in the year are not more than Rs 5 lakh, and
- you have given your PAN or Aadhaar number to the operator.
Firms and companies do not get this relief. If you have not given a valid PAN, section 206AA applies and the rate becomes 5%.
Where is this rule in the Income-tax Act, 2025?
The Income-tax Act, 2025 applies from 1 April 2026, that is, from tax year 2026-27. Returns filed in 2026 for financial year 2025-26 still follow the 1961 Act. The rule itself has not changed, only its address.
| Point | Income-tax Act, 1961 (up to FY 2025-26) | Income-tax Act, 2025 (tax year 2026-27 onwards) |
|---|---|---|
| Duty to deduct | Section 194-O(1) | Section 393(1), Table, Sl. No. 8(v) |
| Rate | 0.1% of gross amount | 0.1% of gross amount |
| Individual or HUF up to Rs 5 lakh | Section 194-O(2) | Section 393(4), Table, Sl. No. 11 |
| No valid PAN | 5% under section 206AA | 5% under section 397(2) |
Is it the same as TCS under GST?
No, and mixing the two is common. Both are taken by the marketplace from your payout, but they belong to two different laws and you get them back in two different places.
| Point | TDS under section 194-O | TCS under GST |
|---|---|---|
| Law | Income-tax Act | Section 52 of the CGST Act |
| Rate | 0.1% of gross amount of sales | 0.5% in total of net taxable value (sales less returns) |
| Where you see it | Form 26AS and AIS on the income tax portal | "TDS and TCS credit received" on the GST portal |
| Where you use it | Against income tax in your return | Electronic cash ledger, to pay GST |
Our help guide on what TCS is and the article on TCS on e-commerce sellers under GST cover the GST side.
A worked example
Imran runs a proprietorship and sells phone covers on one marketplace. In the year his gross sales through it are Rs 24,00,000. He has given his PAN.
- TDS at 0.1% of Rs 24,00,000 = Rs 2,400.
- If he had not given a valid PAN, TDS at 5% would be Rs 1,20,000.
- Had his sales been Rs 4,60,000 with PAN on record, there would be no TDS, since he is an individual below Rs 5 lakh.
At the end of the year his income tax works out to, say, Rs 18,000. He pays Rs 15,600, because Rs 2,400 is already with the department. If his tax had been nil, the Rs 2,400 would come back as a refund after he files.
One more thing. Customers returned goods worth Rs 3,00,000, so the turnover in his books is Rs 21,00,000. The figure against section 194-O in Form 26AS can be higher than that, because the deduction is on the gross amount. Keep a note that explains the gap.
How do you claim it in your return?
- Log in to the income tax portal and open Form 26AS, the annual tax statement, and AIS, the Annual Information Statement. Look for entries under section 194-O from each marketplace.
- Match the TDS there with the TDS lines in your marketplace payment reports.
- If an entry is missing or short, raise it with the marketplace. Credit is given for what shows against your PAN.
- Enter the TDS in the TDS schedule of your return, and report your real turnover, which is sales less returns.
Two related articles help here: AIS and Form 26AS checks before filing and ITR for e-commerce sellers.
The mistake most sellers make
Many sellers see a small deduction in the payout and write it off as one more marketplace charge. It is not a charge. It is your money, lying with the tax department. If you do not file a return, or file without claiming it, you lose it.
The second mistake is copying the Form 26AS amount as turnover, or the bank payout as turnover. Neither is right. Turnover comes from your sales reports.
Sources
- Section 194-O, Income-tax Act, 1961: Income Tax Department (checked 12 Nov 2026)
- TDS rates chart: Income Tax Department (checked 12 Nov 2026)
- Section 206AA, Income-tax Act, 1961: Income Tax Department (checked 12 Nov 2026)
- Section 393, Income-tax Act, 2025: Income Tax Department (checked 12 Nov 2026)
- Section 397, Income-tax Act, 2025: Income Tax Department (checked 12 Nov 2026)
- CBDT guidelines under section 194-O: PIB release, 28 Dec 2023 (checked 12 Nov 2026)
- Section 52, CGST Act: CBIC (checked 12 Nov 2026)
- Notification 15/2024-Central Tax: GST Council (checked 12 Nov 2026)
How AprilTax can help
If you sell online, your return has to tie up marketplace sales, returns, section 194-O TDS and Form 26AS. An AprilTax Tax Expert can prepare and file it for you online at a fixed fee, starting from Rs 1,499. See income tax return filing for sellers.
Frequently asked questions
What is the TDS rate under section 194-O for e-commerce sellers?
Is there a limit below which 194-O TDS is not deducted?
Is 194-O TDS the same as the TCS that marketplaces collect under GST?
How do I get the 194-O TDS back?
What is the section number for e-commerce TDS under the Income-tax Act, 2025?
Is TDS under 194-O deducted on the amount including GST?
Why is the amount in Form 26AS higher than my turnover?
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