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CMA Final · Direct Tax Laws and International Taxation · E-commerce Transaction and Liability in Special Cases

A crypto exchange operating as an e-commerce operator facilitates the sale of a virtual digital asset by a participant for Rs. 6,00,000 through its platform. Under section 393(1) Note 4, how is tax deducted on this transaction?

Tax is deducted only under the virtual digital asset provision at 1%, which is Rs. 6,000. When both the e-commerce and virtual digital asset provisions apply, the Act directs deduction solely under the virtual digital asset provision, so the 0.1% e-commerce deduction is not added.

  1. AUnder 8(v) at 0.1%, being Rs. 600
  2. BUnder both 8(v) and 8(vi), totalling Rs. 6,600
  3. CUnder 8(vi) only at 1%, being Rs. 6,000Correct
  4. DNo deduction since the participant is on an e-commerce platform

Explanation

Note 4 provides that where both 8(v) and 8(vi) apply to a transaction, tax is deducted only under 8(vi), irrespective of Note 3. The rate under 8(vi) is 1%, so tax = 1% x 6,00,000 = Rs. 6,000. Applying both would double-deduct, which the Note forbids.

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