Income Tax Updates for Ecommerce Sellers
CBDT circulars and notifications and the sections of the Income-tax Act that change TDS, due dates and deductions for marketplace and D2C sellers. Each page pairs a plain-English summary with the official text, which you can search here.
All Income Tax Updates
Section, rule and entry numbers work as typed, e.g. 89(5), 194-O or ₹2,500.
7 updates
Notification No. 139/2026General
CBDT sets conditions and Form No. 112A for merger of registered non-profit organisations
Issued Official text · Summary prepared automatically
The Income-tax (Eighth Amendment) Rules, 2026 insert Rule 189A and Form No. 112A into the Income-tax Rules, 2026, laying down the conditions for a registered non-profit organisation to merge with another registered non-profit organisation having the same or similar objects, for the purposes of sections 352(4) [Table: Sl. No. 8] and 354A of the Income-tax Act, 2025. The rules come into force on the date of their publication in the Official Gazette. The notification concerns registered non-profit organisations only and does not concern ecommerce sellers in their business capacity.
Read the summary and full text: CBDT sets conditions and Form No. 112A for merger of registered non-profit organisationsOfficial PDF(opens in a new tab)
Notification No. 134/2026 [G.S.R. 871(E)]General
Revised Form 161: application for waiver of penalty under Section 440(2)
Issued Reviewed by CA Apurav Garg
Notification 134/2026 amends the Income-tax Rules, 2026. Rule 231 now covers waiver as well as imposition, and Form 161 is replaced with the application for waiver of penalty under Section 440(2) of the Income-tax Act, 2025. To use it, a taxpayer pays the tax and interest on assessed income plus additional income-tax (100% or 120% of the tax on under-reported income) by the demand due date, and undertakes not to appeal. It is a general procedural change, relevant only after an assessment order with under-reported income.
Read the summary and full text: Revised Form 161: application for waiver of penalty under Section 440(2)Official PDF(opens in a new tab)
Circular No. 07/2026High impact
Tax audit report due 21 October 2026, audit-case ITR due 21 November 2026 (AY 2026-27)
Issued Reviewed by CA Apurav Garg
For Assessment Year 2026-27 (financial year 2025-26), CBDT has extended the due date of the income-tax return for the persons covered by that clause of Explanation 2 to section 139(1) (broadly, businesses whose accounts must be audited) from 31 October 2026 to 21 November 2026. As a result, the tax audit report under section 44AB is now due on 21 October 2026. Most D2C companies and LLPs above the tax audit limit fall in this group.
Read the summary and full text: Tax audit report due 21 October 2026, audit-case ITR due 21 November 2026 (AY 2026-27)Official PDF(opens in a new tab)
Income-tax Act, 2025: Sections 393 and 400High impact
Income-tax Act 2025: TDS consolidated in Section 393, and Board guidelines under Section 400(2)
Issued Reviewed by CA Apurav Garg
From 1 April 2026 (Tax Year 2026-27), the Income-tax Act, 2025 replaces the separate TDS sections of the 1961 Act with tables in Section 393. Section 393(1) covers payments to residents (commission, rent, contractors, professional and technical fees, purchase of goods, business benefits and e-commerce sales), 393(2) payments to non-residents and 393(3) payments to any person. For an ecommerce seller the rates in the extract below are unchanged in substance: e-commerce operators deduct 0.1% of gross sales (Sl. No. 8(v)), goods buyers deduct 0.1% above ₹50 lakh (Sl. No. 8(ii)) and business benefits attract 10% above ₹20,000 (Sl. No. 8(iv)). Section 400(2), substituted by the Finance Act 2026, lets the Board issue guidelines that bind the income-tax authorities and the person deducting tax. Older circulars on 194-O and 194R should be read alongside the new section numbers.
Read the summary and full text: Income-tax Act 2025: TDS consolidated in Section 393, and Board guidelines under Section 400(2)Official PDF(opens in a new tab)
Income-tax Act, 2025: Section 37(2)(g) (earlier Section 43B(h) of the 1961 Act)High impact
MSME payments: deduction only when paid within the MSMED Act time limit (Section 37(2)(g))
Issued Reviewed by CA Apurav Garg
If you owe money to a micro or small enterprise and do not pay it within the time limit in section 15 of the MSMED Act, 2006 (the agreed date, which cannot be more than 45 days, or 15 days where there is no agreement), the expense is allowed only in the tax year in which you actually pay. Unlike most items in Section 37(2), paying before the return due date does not save the deduction: Section 37(3) expressly leaves out clause (g). For brands buying from small manufacturers, packaging suppliers and job workers, overdue year-end payables can be added back to taxable profit. The rule continues Section 43B(h) of the 1961 Act.
Read the summary and full text: MSME payments: deduction only when paid within the MSMED Act time limit (Section 37(2)(g))Official PDF(opens in a new tab)
Circular No. 17/2020 and Circular No. 20/2023High impact
TDS by e-commerce operators (Section 194-O): gross amount, GST, returns and discounts
Issued Reviewed by CA Apurav Garg
Marketplaces deduct TDS on the gross amount of each seller's sales; the rate is 0.1%, and under the Income-tax Act 2025 the rule sits in Section 393(1) Table Sl. No. 8(v). CBDT Circular 20/2023 (which builds on Circular 17/2020) clarifies the main points. Where several ECOs are involved (for example on ONDC), the seller-side ECO that pays the seller deducts. Shipping, packing and convenience fees charged to the buyer form part of the gross amount. GST shown separately is excluded when tax is deducted at credit. On a refunded return, the TDS can be adjusted against the next sale to the same seller in the same year. Seller discounts reduce the gross amount; marketplace-funded discounts do not. This explains why the TDS credit in Form 26AS rarely matches your net payout.
Read the summary and full text: TDS by e-commerce operators (Section 194-O): gross amount, GST, returns and discountsOfficial PDF(opens in a new tab)
Circular No. 12/2022 and Circular No. 18/2022High impact
TDS on business benefits (Section 194R): influencer products, free samples and gifts
Issued Reviewed by CA Apurav Garg
Brands that send products to influencers, give free samples or reward dealers need to deduct 10% TDS on the value of benefits above ₹20,000 a year per recipient. CBDT's guidelines say a product the influencer keeps is a benefit, while a product returned after the shoot is not. Free samples are not covered by the discount relief. Value is the purchase price, or the price charged to customers if you make the item, without GST. Where the benefit is fully in kind, the brand must make sure the tax is paid before releasing it. From 1 April 2026 the same TDS sits in Section 393(1) Table Sl. No. 8(iv) of the Income-tax Act 2025 (10%, threshold ₹20,000).
Read the summary and full text: TDS on business benefits (Section 194R): influencer products, free samples and giftsOfficial PDF(opens in a new tab)
Official text from CBDT and the Income Tax Department. General information only, not professional advice. The summary is ecomca’s reading of the document; the official PDF is the authoritative version, and later amendments may change it. Check the official source before you act.