How to interpret your result
The TDS shown is deducted at 1% on your net amount — gross sales minus returns and cancellations for that period — not on your gross sales figure. If a large share of your orders get returned, your actual TDS deduction will be meaningfully lower than 1% of what you shipped.
TDS deducted under Section 194O isn't a final cost — it's an advance credit against your income tax liability, reflected in your Form 26AS and claimable at the time you file your ITR. It has no bearing on your GST liability or the separate 1% TCS marketplaces also deduct under GST law.
If your Form 26AS doesn't match what you calculate here, check whether the marketplace's reporting period differs from your own — 194O TDS is deducted on a payment basis, so timing mismatches near month-end are common and usually resolve within a quarter.
What is Section 194O TDS?
When you sell on Amazon, Flipkart, Meesho, or any registered e-commerce operator, the platform is required to deduct 1% TDS on the net amount credited to your account before releasing payment. This is mandated by Section 194O of the Income Tax Act, introduced in the Union Budget 2020.
Net amount = Gross sales credited − Returns and cancellations
So if your monthly sales were ₹1,50,000 and returns were ₹10,000, the platform deducts 1% TDS on ₹1,40,000 = ₹1,400.
When does 194O TDS apply?
| Seller type | Threshold | TDS rate |
|---|---|---|
| Individual / HUF | Only if annual sales exceed ₹5 lakh | 1% |
| Company / Firm / LLP | No threshold — from first rupee | 1% |
| Any seller without PAN | No threshold | 5% |
Once the threshold is crossed in a financial year, TDS applies on all subsequent credits — not just the amount above ₹5 lakh.
How is TDS different from GST TCS?
E-commerce platforms collect two separate deductions that are often confused:
| Section 194O TDS | GST TCS | |
|---|---|---|
| Law | Income Tax Act | GST Act |
| Rate | 1% of net sales | 1% of net taxable value |
| Purpose | Advance income tax | GST compliance |
| Claim in | ITR Schedule TDS2 | GST return (GSTR-3B) |
| Appears in | Form 26AS / AIS | GSTR-2A / GSTR-2B |
Both appear as line items in your marketplace seller account.
How to claim 194O TDS credit in your ITR
- Download Form 26AS from the Income Tax portal and verify the TDS entries
- Cross-check with your AIS (Annual Information Statement)
- In your ITR, go to Schedule TDS2 (TDS on other income)
- Enter the TAN of the e-commerce operator and the TDS amount
- The credit reduces your final tax payable — any excess is refunded