TAXATION OF E- COMMERCE TRANSACTIONS IN INDIA: REGULATORY FRAMEWORK AND CHALLENGES

AUTHOR – SOUMYA DUBEY, STUDENT AT AMITY UNIVERSITY, LUCKNOW CAMPUS

BEST CITATION – SOUMYA DUBEY, TAXATION OF E- COMMERCE TRANSACTIONS IN INDIA: REGULATORY FRAMEWORK AND CHALLENGES, ILE TAXATION LAW AND LEGAL STUDIES (TLLS), 2 (1) OF 2024, PG. 07-10, APIS – 3920 – 0024 & ISSN – 2583-9551

ABSTRACT:

This study examines the regulatory framework and challenges surrounding the taxation of e-commerce transactions in India. The taxation landscape for e-commerce in India is complex, shaped by laws aimed at addressing the unique characteristics of digital commerce while ensuring tax compliance and revenue collection. Central to this framework is the Goods and Services Tax (GST), which applies to the online supply of goods and services. E-commerce operators and sellers must register under GST if their turnover exceeds certain thresholds, allowing them to collect and remit taxes. Additionally, the Tax Collection at Source (TCS) mechanism requires e-commerce platforms to collect taxes on behalf of sellers, ensuring compliance across the supply chain. The taxation framework also includes income tax considerations, such as the Equalization Levy, which targets digital transactions by foreign companies operating in India.

However, several challenges complicate the taxation of e-commerce in India. The multiplicity of taxes, including GST, income tax, and the equalization levy, creates significant compliance burdens, particularly for businesses operating internationally. Issues of classification and valuation arise, especially for digital goods and services that lack a physical presence, making it difficult to accurately determine tax liabilities. Cross-border transactions add further complexity, with jurisdictional challenges and the enforcement of tax laws across borders proving difficult. The intangible nature of digital transactions exacerbates these difficulties, making monitoring and preventing tax evasion more challenging and necessitating robust enforcement mechanisms.

India has made progress in adapting its tax framework to the digital economy, including the expansion of the equalization levy to cover a broader range of digital services and efforts to simplify GST compliance for small e-commerce sellers. The country is also participating in global initiatives to harmonize digital taxation frameworks, enhancing international cooperation to address cross-border tax challenges.

Keywords: Regulatory Framework, Challenges, Taxation, E-Commerce Transactions, India.