The Government has exempted power trading transactions from the purview of tax deducted at source (TDS) and tax collected at source (TCS) to prevent practical difficulties in implementing the levy from affecting functioning of the exchanges.
The Finance Act, 2020 inserted new section 194-0 in the Income Tax Act 1961 which mandated that from October 1, an e-commerce operator shall deduct income tax at the rate of one per cent of the gross amount of sale of goods or provision of service or both, facilitated through its platform. Also, a sub-section (1H) in section 206C of the Act was inserted that mandated deduction of a sum of 0.1 per cent on all e-commerce transactions above Rs 50 lakh.
The Central Board of Direct Taxes has now exempted transactions in securities and commodities, traded through recognised stock exchanges or cleared and settled by the recognised clearing corporation, including recognised stock exchanges or recognised clearing corporation located in International Financial Service from this levy.