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

GlobeMart Ltd, an e-commerce operator, receives Rs 8,00,000 from a participant, Sundaram Traders Pvt Ltd, as fees for hosting advertisements on its portal, unrelated to any sale facilitated. Separately, it pays Sundaram Rs 40,00,000 as sale proceeds of goods sold through the platform. Sundaram also provides GlobeMart consulting services of Rs 2,00,000 (single bill, no connection with the sales) for which GlobeMart owes Sundaram fees. Applying section 393(1), Table Sl. No. 8(v) and Note 3(d) and (e), which statement is correct?

Tax of Rs 4,000 (0.1% of Rs 40,00,000) is deducted on the sale proceeds under the e-commerce provision. The unrelated consulting fee is not shielded, because the bar on other deductions does not cover services unconnected with the sales, so the professional or technical fee provision applies to it.

  1. ATax under Sl. No. 8(v) applies at 0.1% on Rs 40,00,000, giving Rs 4,000, and the consulting fee is not covered by that deduction, so it is dealt with under the provision for professional/technical fees, subject to its Rs 50,000 thresholdCorrect
  2. BTax of Rs 4,000 on sales is the only deduction, because Note 3(d) bars deduction under every other provision for all payments
  3. CTax is deducted at 0.1% on Rs 42,00,000 including the consulting fee
  4. DNo deduction on the sales, because Sl. No. 6(iii) prevails over Sl. No. 8(v)

Explanation

Sales proceeds of Rs 40,00,000 attract 0.1% = Rs 4,000 under Sl. No. 8(v), which takes precedence for that transaction. Note 3(e) says the bar in Note 3(d) does not apply to amounts for services not connected with the sale, such as advertisement hosting or other services. Therefore the unrelated consulting fee is outside the 8(v) shield and is governed by the separate provision for professional or technical fees. Option B overstates Note 3(d).

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