images (57)The Income Tax department has trained its scanner on the burgeoning ‘e-commerce’ business in the country with the taxman deciding to monitor a host of services conducted by these popular online portals to better fill up the revenue kitty.
After making an official assessment report on the online retail business in India, the department has decided to track these “huge business” conducting services for extracting the special category of Tax Deducted on Source (TDS) which is taken from the payment made by firms and organisations for getting special services done on the internet retail space.
A “strategy action plan” formulated by the CBDT, the apex policy making body of the I-T department, for bolstering revenue collection in the current fiscal, has asked taxman to pay special attention to this area of business.
The action plan prepared for 2015-16, states that advertisements on different websites of various organised and unorganised agencies, payments for jobs like creating a website, translation of pages, data entry of text, research, among others are areas which can yield “significant revenue” under the TDS category.
As per industry estimates, e-commerce business in India was about USD 6 billion in value in 2012 and is expected to reach USD 76 billion by 2021.
The I-T department has particularly been bolstered by ever-increasing collections under the TDS head as it believes that collecting taxes this way promotes a “non-adversarial” regime and according to latest data of the Finance Ministry, TDS now contributes 36.08 per cent of the total direct taxes collection.
The Central Board of Direct Taxes has also decided and instructed the I-T offices to monitor “catering contracts of 5-star hotels” and “sub-contractors” working with large and small infrastructure companies for tax collection under TDS.
Under the new service sectors, which will be monitored by the taxman this fiscal, the action plan has called for including payments made by educational institutes to guest faculty, payments made to event managers and medical transcription companies among few others.
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