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

Digi Marketplace, an e-commerce operator, received Rs. 3,00,000 from a resident seller, Anand Enterprises Ltd, for hosting advertisements on its platform, unrelated to the seller's sales on the platform. Under section 393(1), Table Sl. No. 8(v), Note 3, which statement is correct?

Amounts for hosting advertisements or other services not connected with the facilitated sales are carved out of the protection in the e-commerce note. So the bar on deduction under other provisions does not apply, and other provisions of the Chapter can be attracted to this payment.

  1. ATax is deductible at 0.1% on this amount under Sl. No. 8(v) only
  2. BNo tax is deductible because Sl. No. 8(v) overrides every other provision
  3. CTax is deductible on this amount at 1% as a virtual digital asset
  4. DThe exclusion in Note 3(d) does not cover this amount, so other provisions of the Chapter may apply to it, as it is not in connection with the sale or servicesCorrect

Explanation

Note 3(e) states that Note 3(d) (no deduction under any other provision once Sl. No. 8(v) applies) does not apply to amounts received for hosting advertisements or other services not connected with the sale or services. So this payment is not shielded and other provisions of the Chapter, such as those for contractors or professional or technical fees, can apply. The option saying 8(v) overrides everything ignores Note 3(e).

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