The budget has turned out to be a different tale for the start-up and e-commerce universe as it proposed a new levy of 1 per cent TDS (tax deducted at source) on e-commerce transactions.

However, start-ups stood to benefit as the budget announced various measures including relaxing tax incentives and setting up of an investment clearance cell for these entities and entrepreneurs.

“In order to widen and deepen the tax net by bringing participants of e-commerce (sellers) within tax net, it is proposed to insert a new section 194-O in the Act so as to provide for a new levy of TDS at the rate of one per cent,” the budget documents said. It said that the amendments will take effect from April 1, 2020.

The documents added that the e-commerce operator — an entity owning, operating or managing the digital platform — will have to deduct one per cent TDS on the gross amount of sales or service or both.

This provision will not apply in cases where the seller’s gross amount of sales during the previous year through the e-commerce operator is less than Rs 5 lakh and the seller has furnished his PAN or Aadhaar number.

However, for start-ups, the finance minister has proposed the easing of tax payments with regard to Esops.

The Centre also proposes to provide early life funding to stage start-ups in initial stage.