E-commerce companies have sought more time to implement a government proposal to levy a new tax, although they have, in principle, agreed to its imposition.

The ecommerce entities, including Amazon.com and Walmart-owned homegrown etailer Flipkart, have said they need time to upgrade IT systems in order to enable them to collect the 1% tax deduction at source (TDS) from sellers, a senior government official said.

“They’ve made representations, they're fine with the tax deduction plan, but they want the date to be at a later time...They want to upgrade their IT system, which will take time," the official said asking not to be named since the discussions were ongoing.

The income tax department plans to bring the unorganised sector into the tax net and widen the overall tax base. The move to tax e-commerce transactions at source was one way to reduce litigation, officials said. E-commerce companies said they were seeking more clarity on the new rule.