A report prepared by VM Muthuramalingam, member (widening the tax base), says this organisation will forward the information to the concerned countries. The countries getting this information will go ahead to bring to tax the income as a result of the transaction according to their domestic law of the DTAA, if there is any, between the concerned countries.

The report has suggested that the government should take initiatives in this area for protecting its right to levy taxes. Information dissemination being a grey area, e-commerce has thrown up a new challenge to the tax authorities throughout the globe. The present taxation laws, based either on business connection or "permanent establishment", do not provide a solution to the problem of taxation ofinternet transactions.

The technical feasibility of "taping" cyberspace transactions, however, needs to be considered in consultation with Videsh Sanchar Nigam Ltd (VSNL), it has added.

The articles on `mutual agreement procedure' and `exchange of information' can form the basis of a system of dissemination of information of internet commerce to the concerned countries' competent authorities for utilisation in accordance with the law of the country.

Having come to the conclusion that gathering of "evidence" could be well nigh impossible in respect of individual or various financial/commercial transactions done on the internet, the study examined the question of some methodology through which the person who has received the receipts could be forced to make contribution of similar nature of tax.

The report has dwelt on the view that some sort of a "property tax" be considered for being imposed on the basis of the mentioned receipts and which have resulted in creation of the assets in the form ofimmovable and/or movable property.

The identification of such assets could also be undertaken by the international organisation. The jurisdiction to tax could be assigned to the country whose citizen the individual might be and exemption/sharing of the tax levied could be in terms of a fresh article which would need to be incorporated in the agreements for avoidance of double taxation where the contracting states deems it necessary to address this problem, the study has envisaged.

It has pointed out, however, that fructification of the suggestion would be possible only with the cooperation of the various nations which become members.

The report has felt that the said arrangement could also take care of receipts arising on account of e-cash transactions. As the information of this international organisation may take some time to reach the required destination, the report has suggested that the government can consider posting one officer of the rank of joint secretary as director (international taxation)assisted by additional/deputy directors at all major cities.

To make this new machinery effective, all modern gadgets used in internet commerce should be provided to the officers working in this unit, the report says.

This unit would be required to develop an active interaction with other departments/enforcement agencies to procure useful information for utilisation by the assessing officers during the assessment processes.To keep to the time schedules stipulated in Section 153 of the Income-tax Act, 1961, a system of maintaining the jurisdictional patterns of assessing officers all over the country will be essential so that information of relevant internet commerce/financial transactions is conveyed directly to the concerned assessing officer, the report says.