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

Under the Income-tax Act, 2025, an e-commerce operator facilitates sales by an e-commerce participant, and the buyer pays the participant directly. What is the position regarding the tax deduction by the operator?

The amount paid directly by the buyer to the participant is deemed to be paid by the e-commerce operator. It is added to the gross amount of sales or services, and the operator deducts 0.1% on that gross amount. It is not limited to the operator's commission.

  1. ANo deduction applies because the operator did not itself pay the participant
  2. BThe direct payment is deemed paid by the operator and is included in the gross amount for deduction at 0.1%Correct
  3. CDeduction is at 0.1% only on the commission earned by the operator
  4. DDeduction is at 2% on the direct payment because it is a payment to a contractor

Explanation

Note 3(b) to serial number 8(v) of section 393(1) says a payment made directly by the purchaser to the participant, for a sale facilitated by the operator, is deemed credited or paid by the operator. It is included in the gross amount on which 0.1% is deducted. The commission-only base is wrong because the rate applies to the gross amount of sale or services.

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