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  • Sep 08, 2020
  • Digital companies including Amazon, Facebook seek clarity on ecommerce transactions tax

    Top digital companies including Amazon, Flipkart, Bookmyshow and Facebook have sought clarity from the government on how a 1% tax on ecommerce transactions announced in the previous budget would be levied.

    The first instalment of the new tax is due in October and there is some ambiguity over how it is to be calculated, experts said.

    Companies want the government to come out with precise rules for this tax, which they are to deduct before payments to vendors, and how certain transactions should be treated.

    The new section that includes the 1% tax says, “Where sale of goods or provision of services of an ecommerce participant is facilitated by an ecommerce operator through its digital or electronic facility or platform (by whatever name called), such ecommerce operator shall, at time of credit of amount of sale or services or both to the account of an ecommerce participant or at the time of payment thereof to such ecommerce participant by any mode, whichever is earlier, deduct income tax at the rate of 1% of the gross amount of such sales or services or both.”