Govt for amending I-T laws to tax E-comm firms

New Delhi, July 15: Government is considering amending the Income Tax legislations to tax companies carrying out E-commerce in the country without having a physical presence here.

Central Board of Direct Taxes (CBDT) chairman A Balasubramanian said that the definition of “permanent establishment” envisaged in Income Tax laws has to be changed as many of the foreign companies engaged in E-commerce may operate in India without having a physical presence here.

The move comes after a growing revenue stream being generated from the E-business sector which are flowing out untaxed in the absence of adequate tax laws.

According to a Nasscom-McKinsey report, India has the potential of earning revenue worth $10 billion by 2008 from ebusiness. E-commerce and Internet related software and services exports amounted to $1.2 billion in 200-01, and is expected to go up to $3 billion by 2003-04.

“With increase in E-commerce in the country, there is an urgent need to put in place adequate legislations so that companies operating in India without having physical presence could be brought under tax net,” Mr Balasubramanian said.

Under present legislations, CBDT can impose tax on only those companies which have a physical presence in the country, he said.
The government had constituted a committee under Kanwarjit Singh to suggest necessary changes in the Income Tax Act so as to tax ecommerce companies.

“The committee has submitted its report. We areconsidering its recommendations,” Mr Balasubramanian said.

Apart from the committee report, revenue officials are in touch with their counterparts in other countries to come up with legislations that would be in tune with international standards.

Income Tax officials recently attended a meeting of over 100 countries to discuss ways of taxing ecommerce.

-- PTI