E-Commerce Taxation In India: Challenges And Implications

Mrigakshee Baruah, LLM, (Corporate and Commercial Law) School of Law, CHRIST (Deemed to be University) Central Campus, Hosur Road, Bangalore

Dr. Sivananda Kumar K, Associate Professor, School of Law, CHRIST (Deemed to be University) Central Campus, Hosur Road, Bangalore

I. ABSTRACT

The emergence and proliferation of e-commerce can indeed be considered one of the most transformative developments in the history of human economics. Ecommerce has changed many facets of consumer behaviour, corporate operations, and the world economy. Increased internet usage, improvements in safe online payment methods, better logistics and supply chain management, and the widespread use of smartphones and other digital devices are just a few of the variables that have contributed to this shift. E- commerce, which encompasses the online buying and selling of goods and services, has revolutionized traditional commerce by harnessing the power of the internet and digital technologies. This phenomenon has gained significant momentum in recent years, and its impact has been felt worldwide, including in India. However, the tax structure of e-commerce in India presents a complex web of challenges and implications that arise from the dynamic nature of the digital economy. A combination of direct and indirect taxes characterizes India’s regulatory environment for e-commerce taxation. This paper explores the taxation system under the Income Tax Act, Finance Act, and GST Act in order to provide light on the intricacies of e- commerce taxes in India. It draws attention to the difficulties encountered, such as figuring out tax jurisdiction, the idea of permanent establishment, and commercial tax evasion strategies. Several indirect taxes, such as CST and VAT, have made e-commerce businesses even more difficult. States are enacting extra levies, which creates logistical challenges. The paper also examines the international efforts to address the problems with e-commerce taxes. The proposals made by the OECD place a strong emphasis on non- discriminatory tax treatment and changing the tax code to allow for digital transactions. The EU's E-commerce VAT Directive mandates non-EU companies to register with an EU tax authority, ensuring fair taxation in cross-border digital transactions. The US Advisory Commission on Electronic Commerce suggested extending the moratorium on online taxes and streamlining the sales tax system as two ways to solve the problems with internet taxation.

Keywords: E-commerce, Taxation, India, Regulations, International efforts