Taxation of E Commerce Transactions
E Commerce is nothing but running business through the electronic means without the requirement of any human interface.
In case of Indian e-tailors who are running their operations from within India their taxation is as simple and straight forward as applicable to a normal business entity which is operating, the only issue in the e Commerce business is when the business is being operated by a Non Resident Indian.
In such case, all those income which either accrue or arise India shall be deemed to be the income which shall be subject to income tax in India.
wherein the crucial factor for determination of accrual or receipt is based on the determination of the place of Permanent Establishment.
If a non resident has a permanent establishment in India then that non Resident shall be liable to Income tax in India.
Determination of Permanent Establishment
In general a permanent establishment shall be defined as a fixed place of business through which the affairs of the enterprise are carried on, which means:
a) There should be a place of business i.e a facility such as premises.
b)The place must be fixed, i.e such place shall be fixed with a certain degree of permanence.
c)The enterprise has to carry on this business at such permanent place of business.
Mere operating of a website in one place doesn't mean that there exists a permanent place of business, as a website has no physical presence in that particular place.
Liability of Deducting TDS if any amount paid to a Non Resident
Any person paying any amount to a Non Resident on account of transactions entered with such person, it the responsibility to deduct TDS under section 195 of the income tax act 1961 as per the rates prescribed in the respective sections.