Question

As per the Union Budget 2020-21, TDS at the rate of ______ is levied on e-commerce transactions.
1. 3%
2. 1%
3. 2.5%
4. 0.25%

Answer 1

Correct Answer - Option 2 : 1%

The correct answer is 1%.

• As per the Union Budget 2020-21, TDS at the rate of 1%is levied on e-commerce transactions. 
  • The government proposed a new levy of one per cent TDS (tax deducted at source) on e-commerce transactions, a move that could increase the burden on sellers on such platforms.
  • The main purpose of Govt. is to increase tax payer’s base and eventually collect taxes which will result in the development of the economy as a whole.
  • In Budget 2020, Govt. has taken many steps for widening and deepening the tax base.
  • One step is the insertion of section 194-O of Income-tax Act, 1961 requiring e-commerce operators to deduct TDS from payments made to e-Commerce participants.
  • The same is applicable from 01/10/2020.

• Budget and Constitutional Provisions
  • According to Article 112 of the Indian Constitution, the Union Budget of a year is referred to as the Annual Financial Statement (AFS).
    • It is a statement of the estimated receipts and expenditure of the Government in a financial year (which begins on 01 April of the current year and ends on 31 March of the following year). In addition to it, the Budget contains:
      • Estimates of revenue and capital receipts,
      • Ways and means to raise the revenue,
      • Estimates of expenditure,
      • Details of the actual receipts and expenditure of the closing financial year and the reasons for any deficit or surplus in that year, and
      • The economic and financial policy of the coming year, i.e., taxation proposals, prospects of revenue, spending programme and introduction of new schemes/projects.