Taxation of E-commerce: Overcoming Challenges to Traditional Tax Regimes

Abstract

Given the phenomenal rate of growth of e-commerce in India, the taxability of e-commerce transactions is a pertinent issue in terms of its revenue implications for the government. It is well recognized that e-commerce presents some formidable challenges for the tax administration. With the physical location of both the buyer and the seller of the commodity in question irrelevant for the transaction, assigning tax liability would be hard. In addition, many goods (such as software) sold through e-commerce are directly downloaded and do not necessarily have a physical presence. The paper discusses the taxation of e-commerce transactions in the post-GST era. With the TCS provisions coming into force, tax authorities are empowered to monitor e-commerce transactions and ensure that suppliers selling their goods through e-commerce platforms do not get away with under-reporting their turnover.