Finance Act 2020 introduced provisions for the collection of taxes at source by the seller for sale of goods, effective from 1 October 2020. Similarly, provisions for withholding of taxes by e-commerce operators on sales of goods by participants listed with such e-commerce operators were also introduced. Furthermore, Finance Act, 2021 introduced provisions for withholding of taxes by buyers on the purchase of goods, effective from 1 July 2021.

Provisions for withholding/collection of taxes at source in case of purchase/sale of goods are mirror images of each other. Due to this, there are a lot of uncertainties. In addition, there is an overlapping of the provisions with withholding tax on e-commerce transactions. All this brings about a lot of anxiety of the taxpayers around the application of such provisions.

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