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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, which payment is covered by the rule that where an e-commerce transaction and a transfer of a virtual digital asset overlap, tax is deducted only under the virtual digital asset provision, and at what rate?

Where an e-commerce sale and a virtual digital asset transfer overlap, tax is deducted only under the virtual digital asset provision, at 1% of the consideration. The 0.1% e-commerce deduction is not applied in addition, because the Act directs a single deduction under that provision.

  1. ATax deducted under Sl. No. 8(vi) at 1%, on the consideration for transfer of the virtual digital assetCorrect
  2. BTax deducted under Sl. No. 8(v) at 0.1%, on the gross amount of sale
  3. CTax deducted under both Sl. No. 8(v) and 8(vi), at 0.1% plus 1%
  4. DTax deducted under Sl. No. 8(vi) at 0.1%, on the gross amount of sale

Explanation

Note 4 to Sl. No. 8 provides that where both 8(v) and 8(vi) apply, tax is deducted only under 8(vi), irrespective of Note 3. Sl. No. 8(vi) prescribes 1% on consideration for transfer of a virtual digital asset. Option stacking both rates is wrong as deduction is under one provision only.

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