TDS on E-commerce Seller Commission: 194H vs 194O
When you sell on Amazon, Flipkart, Swiggy, or any other marketplace, you see a commission deducted from your payout. Then you see a TDS deduction. And then you wonder: should I be deducting TDS on the commission that the platform charges me?
The short answer is no. Once the platform deducts TDS under Section 194O on the gross transaction value, you are not required to deduct TDS under Section 194H on the commission.
Here is exactly how it works, and why.
Short answer: Section 194O(3) is an overriding provision. Once the e-commerce operator has deducted under 194O on the gross sale value, no other TDS provision in that Chapter applies to the same transaction. Because the gross value already contains the commission, a second deduction under 194H would tax the same rupees twice.
The Core Difference: Who Acts and When
| Parameter | Section 194O | Section 194H |
|---|---|---|
| Who acts | E-commerce operator, such as Amazon, Flipkart, Swiggy or Zomato | Payer of commission, which could be the seller, the platform, or any business paying commission |
| What it covers | Sale of goods or provision of services facilitated through the e-commerce platform | Commission or brokerage payments made to an agent or intermediary |
| Rate | 0.1% of the gross amount of sales or services | 2% of the commission amount |
| Threshold | Rs 5 lakh per financial year for individuals and HUFs, no threshold for others | Rs 20,000 per financial year |
| When deducted | At the time of credit or payment, whichever is earlier | At the time of credit or payment, whichever is earlier |
| Base | Gross amount of sales or services, before deducting commission | Commission amount only |
Section 194O: The E-commerce TDS Provision
Section 194O was introduced specifically for e-commerce transactions. It requires the e-commerce operator, the platform itself, to deduct TDS on payments made to e-commerce participants such as sellers and service providers. Our full Section 194O guide for FY 2026-27 covers the mechanics in depth.
Who Must Deduct?
- E-commerce operators such as Amazon, Flipkart, Swiggy, Zomato, Uber, Ola, Paytm and BookMyShow
- They deduct TDS at 0.1% of the gross amount of sales or services facilitated through their platform
When Does TDS Apply?
- The operator deducts TDS on the entire transaction value, before deducting any commissions or fees
- If the seller is an individual or HUF, no TDS is required where total transactions on the platform do not exceed Rs 5 lakh in the financial year, provided PAN or Aadhaar has been furnished
- Where PAN or Aadhaar has not been furnished, the rate rises to 5% under Section 206AA and the Rs 5 lakh threshold gives no protection
What Is the Base?
TDS under Section 194O is calculated on the gross amount, meaning the full sale price of goods or services. This includes the commission that the platform will later deduct.
Example: you sell goods worth Rs 10,00,000 on Amazon. Amazon charges Rs 1,00,000 as commission.
- Gross sales: Rs 10,00,000
- TDS under 194O at 0.1%: Rs 1,000
- Amazon commission: Rs 1,00,000
- Net payout to you: Rs 8,99,000
Amazon deducts TDS on the full Rs 10,00,000, not on the Rs 9,00,000 remaining after commission. This is the detail that creates the confusion, because the commission has already passed through the TDS base once.
Section 194H: TDS on Commission
Section 194H applies when someone pays commission or brokerage to an agent or intermediary. Our Section 194H guide covers the principal-agent test and the trade discount distinction in detail.
Who Must Deduct?
- Any person making a commission payment, subject to the tax audit and turnover conditions for individuals and HUFs
- The rate is 2% of the commission amount, reduced from 5% with effect from October 1, 2024
- Threshold: Rs 20,000 per financial year in aggregate to one person, raised from Rs 15,000 with effect from April 1, 2025
When Would a Seller Deduct 194H?
In a typical e-commerce transaction, the seller does not deduct 194H. The platform deducts 194O on the entire transaction.
But in other scenarios, such as paying a sales agent, a distributor, or an affiliate marketer directly, the payer would deduct TDS under 194H. If you are unsure which provision governs a particular payment, see which TDS section applies to your payment.
The Override Rule: Section 194O(3)
This is the single most important provision for e-commerce sellers.
Section 194O(3) of the Income Tax Act states:
Notwithstanding anything contained in Part B of this Chapter, a transaction in respect of which tax has been deducted by the e-commerce operator under sub-section (1), or which is not liable to deduction under sub-section (2), shall not be liable to tax deduction at source under any other provision of this Chapter.
What This Means in Practice
If an e-commerce operator has already deducted TDS under Section 194O on a transaction, no other TDS provision applies to that same transaction, including Section 194H.
The seller is not required to deduct TDS under Section 194H on the commission invoice raised by the platform.
Note the second limb of the sub-section, which is easy to miss. A transaction that is not liable to deduction under sub-section (2), meaning an individual or HUF seller below the Rs 5 lakh threshold, also escapes every other provision in the Chapter. Falling below the 194O threshold does not push you back into 194H. It takes you out of the Chapter for that transaction altogether.
Why This Prevents Double Taxation
The logic follows directly from the deduction base. TDS under 194O is charged on the gross sale value, and the gross sale value already includes the commission the platform will retain. Deducting again under 194H on that same commission would apply TDS twice to the same rupees in a single transaction. Section 194O(3) exists precisely to close that gap.
Real-World Example: Amazon Seller
| Item | Amount |
|---|---|
| Gross sales | Rs 10,00,000 |
| Amazon commission at 10% | Rs 1,00,000 |
| TDS under 194O at 0.1% on Rs 10,00,000 | Rs 1,000 |
| TDS under 194H on Rs 1,00,000 | Rs 0, not applicable, 194O already covers the transaction |
| Net payout to seller | Rs 8,99,000 |
The Rs 1,000 deducted appears in your Form 26AS against the platform's TAN and is claimed as credit when you file your return. See AIS vs Form 26AS vs TIS for how to reconcile the three statements, and TDS not showing in Form 26AS if the credit fails to appear.
When 194H Still Applies in E-commerce
There is one scenario where 194H could apply to an e-commerce operator's commission, and it is a narrow one.
Platform Pays Commission Without Facilitating a Sale
If an e-commerce operator pays commission to an agent for bringing in new sellers, or for referral services, and that commission is not part of a transaction on which 194O has already been deducted, Section 194H may apply.
However, the CBDT has clarified through Circular No. 20 of 2023 that convenience fees or commissions charged by an e-commerce operator are covered under Section 194O. The general rule holds: if 194O applies, 194H does not.
The 2026 Transition: Section 393 Under the New Act
From April 1, 2026, Tax Year 2026-27, the Income Tax Act, 2025 applies. Both 194O and 194H have been renumbered:
| Old section | New section under ITA 2025 | Payment code |
|---|---|---|
| 194O | Section 393(1), Table Sl. No. 8(v) | 1035 |
| 194H | Section 393(1), Table Sl. No. 1(ii) | 1006 |
The rates and thresholds remain unchanged. However, when filing TDS returns for TY 2026-27, you must use the new payment codes. The Income Tax Act 2025 section mapping guide and the new TDS payment codes reference carry the full conversion table.
Quick Reference: 194O vs 194H for E-commerce
| Question | Answer |
|---|---|
| Who deducts TDS on my Amazon sales? | Amazon, the e-commerce operator, deducts under 194O |
| What rate? | 0.1% of gross sales, or 5% without PAN or Aadhaar |
| Do I deduct TDS on Amazon's commission? | No. 194O already covers the transaction |
| When would 194H apply? | For commission payments outside e-commerce transactions, or where no 194O deduction has occurred |
| What is the threshold for 194O? | Rs 5 lakh for individuals and HUFs, none for companies, firms and LLPs |
| What is the threshold for 194H? | Rs 20,000 per financial year in aggregate to one person |
Key Takeaways for E-commerce Sellers
| Point | Detail |
|---|---|
| 194O is the primary provision | The platform deducts TDS at 0.1% on gross sales, before commission |
| No double deduction | If 194O applies, 194H does not apply to the same transaction |
| Below threshold is still out of scope | Section 194O(3) also covers transactions not liable under sub-section (2) |
| The Rs 5 lakh threshold is narrow | It applies only to individuals and HUFs who have furnished PAN or Aadhaar |
| PAN discipline matters most | Without PAN or Aadhaar the rate jumps to 5% from the first rupee |
| From April 1, 2026 | 194O maps to Section 393(1) Sl. No. 8(v), payment code 1035 |
| From April 1, 2026 | 194H maps to Section 393(1) Sl. No. 1(ii), payment code 1006 |
Where Tax Garden Helps
For e-commerce sellers, tracking TDS on marketplace sales is just one piece of the puzzle. You also need GST compliance, ITR filing, and reconciliation between GSTR-1, GSTR-3B, and your Form 26AS. Most small sellers miss ITC claims, file the wrong GSTR-1, or overlook TDS credits, and that is where a CA who understands the marketplace ecosystem becomes useful.
Tax Garden's TDS compliance plans help you:
- Reconcile TDS deducted under 194O with your Form 26AS and AIS
- Ensure you claim the correct ITC on GST paid
- File GSTR-1, GSTR-3B, and your ITR accurately
- Understand whether 194H applies to any of your non-marketplace income
- Update your systems for the new Section 393 payment codes from April 1, 2026
For related topics, see our guides on Section 194O TDS on e-commerce payments, Section 194H TDS on commission and brokerage, GST compliance for quick commerce sellers, the TDS rate chart for FY 2026-27, TDS threshold limits across all sections, higher TDS for non-filers under 206AB and 206CCA, and the ITR filing guide for AY 2026-27.
Work with the Trusted Tax & Compliance Services in Kondapur, Hyderabad - Tax Garden for expert GST filing, ITR, TDS, ROC, and startup compliance support.
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Sources
This guide is verified against Section 194O of the Income Tax Act, 1961 (TDS on payments made by e-commerce operators to e-commerce participants), Section 194O(3) (the overriding provision barring deduction under any other section of the Chapter where 194O has been deducted or the transaction is not liable under sub-section 2), Section 194H (TDS on commission and brokerage), the Finance (No. 2) Act 2024 (reduction of the 194O rate from 1% to 0.1% and the 194H rate from 5% to 2%, both effective October 1, 2024), the increase in the 194H threshold from Rs 15,000 to Rs 20,000 effective April 1, 2025, Section 206AA (higher rate where PAN is not furnished), CBDT Circular No. 20 of 2023 (guidelines under Section 194O confirming that convenience fees and commissions charged by an e-commerce operator fall within the section), and Section 393 of the Income Tax Act, 2025 (consolidated non-salary TDS table effective April 1, 2026). Rates, thresholds and payment code mapping cross-checked against TaxGuru, Bajaj Finserv, Treelife and ICAI reference materials as of September 2026. Verify current rates, thresholds, and procedures on incometax.gov.in before acting, as rules may be updated periodically. This article is general information on TDS under Section 194O and Section 194H and not a substitute for professional advice.
