Panel to study e-commerce scope

The sources said such a committee is necessary as e-commerce taxation has puzzled governments throughout the globe and no comprehensive method has been developed to tax the business through internet till date despite a manifold rise in trading and servicing through this mode.

Various estimates suggest that, anticipated sales of tangibles on the net is expected to cross $ 5 billion by the turn of the century and revenue from the services and advertising will cross $ 10 billion by that time.

Finance ministry sources said that with Cabinet giving its nod to the IT Bill, business through e-commerce is expected to grow manifold in the country after the Bill is passed by the Parliament.

They pointed out thatit has now become a necessity to decide very soon what approach the country should take to tax e-commerce. We will have to choose an effective method quickly, they added.

Officials said that enforcement of a presumptive tax on the basis of telecommunication billing, popularly known as Bit tax, may not match the commercial payment involved in the transaction and a more competent method for taxation is required.

However, any comprehensive method of e-commerce taxation would require modifications in double taxation agreements with other countries.

At present, taxation laws of various countries including India ensure levy of tax on trade which constitute physical establishment’ of tangible goods or actual movement of person to perform service at a particular location.