Budget 2024: FICCI urges amendments in Sec 194-O for the benefit of farmers and FPOs

Industry chamber FICCI has urged the central government to make some amendments in section 194-O of the Income Tax Act for the benefit of farmers and FPOs. In its recommendations, the chamber has said that section 194-O of the Act should be made NOT applicable to digital platforms operated for the benefit of farmers/FPOs. Finance Minister Nirmala Sitharaman will present the first budget of Modi 3.0 government on 23rd July 2024.
FICCI has said in its recommendations that as per amendment by Finance Act 2020, TDS is to be deducted by an e-commerce operator which facilitates sale of goods or provision of services by any e-commerce participant. The language of section 194-O of the Act is wide enough to bring within its ambit, even digital platforms that may offer services, free of cost or at a marginal fee, to farmers and Farmer Producer Organizations (FPOs) with a view to enable the farm sector reap the benefits of digitalization and also to enhance farmers income, even though, agricultural income of farmers and income of FPOs are exempt from tax.
The chamber has said that the Indian private sector, including start-ups, have been working on innovative ways to enhance farmers' income. One such initiative is in the Agri-tech space, wherein digital platforms have been developed/operated that disseminate relevant information to Farmers/FPOs on various aspects including prices of farm produce across mandis, weather forecasts, best agri practices to follow etc., which have encouraged digital inclusion of farmers. 
But, the introduction of Sec 194-O is acting as a dampener, since if farmers/FPOs sell their produce or buy agri inputs through such digital platforms, then the platform operator will need to deduct TDS @ 1% under section 194-O of the Act. Typically, FPOs operate on a thin margin (say 1%) which if taken away by way of TDS may disincentivise such efforts. Further, farmers may not have PANs which imply TDS will be at a higher rate.