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

MarketHub Ltd, an e-commerce operator, charges Rs. 6,00,000 to Kiran Pvt Ltd, a participant, for hosting advertisements on its platform that are not connected with any sale of goods or services by Kiran Pvt Ltd. Which statement correctly describes the TDS position under section 393(1) Table Sl. No. 8(v) and Note 3?

Deduction under serial number 8(v) does not apply to the advertisement hosting fee, because it is not connected with a sale or service facilitated by the operator. Note 3(e) preserves deduction under other provisions of the Chapter for such amounts, so the other provisions can apply.

  1. A0.1% must be deducted on Rs. 6,00,000 under serial number 8(v)
  2. BTax deduction under serial number 8(v) is not applicable; deduction under other provisions of the Chapter can apply to this amountCorrect
  3. CNo tax can be deducted under any provision because the payee is an e-commerce participant
  4. DTax must be deducted at 1% as consideration for a virtual digital asset

Explanation

Serial number 8(v) covers sums on account of sale of goods or services facilitated by the operator. Note 3(e) says the bar on deduction under other provisions does not apply to amounts for hosting advertisements or other services not connected with such sale. So 8(v) does not cover this amount and other provisions of the Chapter can apply. Option one wrongly extends 8(v) to unrelated advertisement fees.

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