The high powered committee, set up by the Indian Government to examine the existing taxation laws, to determine if any changes need to be made to these laws for taxation of the income from e-commerce transactions has submitted its report to the Government. With a laudable view of building consensus and giving opportunities to people to contribute to the process of formulating Indian tax position on these transactions, the government has invited comments on this report from public. The time limit for the comments was October 30, 2001which has now been extended up to January 31, 2002.

India has been playing a significant role in the field of technology and e-commerce. This industry has grown at an astounding rate in the last decade or so, and has tremendous potential. If the recommendations of the committee are accepted in their present form, it could lead to significant withholding taxes in India. In view of the fact that the report disagrees with characterization of income on as many as 13 out of the 28 categories of transactions considered by the OECD, and proposes to impose withholding tax on gross basis, India could end up being out of step with the Global community. An e-commerce transaction typically can pass through several countries and levy of taxes by countries in this manner could lead to issues of non-availability of tax credits in other countries and could ultimately lead to litigation, multiple taxes, resulting in the stunted growth of e-commerce.

In view of the above, at the initiative of Mr. Nishith Desai, of Nishith Desai Associates, a legal and tax counseling firm, a group of eminent professionals, academicians and industry representatives from India and other geographic locations, spread around the world, have come together in the form of eCom Taxpert Group to give well considered comments to the Indian government on the report.