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E-commerce is a blossoming sector of trade and commerce. E-commerce refers to buying and selling of goods and services through electronic means, mainly through the internet. This sector has seen a sudden development this decade. It is the very own trademark of this century. Among the top global economies, India has the highest growth rate in terms online retail market. The Compound Annual Growth Rate (CAGR) of 53% was witnessed by the country for the period of 2013-2017. Revenue from the sector is expected to reach eight trillion and twenty- three billion rupees (83, 28,00,00,00,000 rupees) in the year 2020. 
The country is expected to witness Compound Annual Growth Rate (CAGR) of 17.8% for the period of 2019-2023. The largest segment in the e-commerce market is Fashion. User penetration is 37.5% in 2019 and is expected to increase to 46.2% by 2023.
There are many features of e-commerce that lead to its success. E-commerce has been growing a lot, especially in India as it overcomes geographical barriers. India being a vast country, this feature plays a huge role in it becoming famous. E-Commerce has been and is a fantastic source of purchasing and selling goods and rendering services.
One can easily find products that are not easily available in nearby stores on the internet. With a single click, the product would be at one’s doorstep. E-commerce has also contributed a lot to the economy as it provides more employment opportunities. With their increasing success rate, e-commerce platforms are now the most desirable working platforms for the job aspirants. E-Commerce not only benefits the purchasers but the whole economy as it provides for more employment. For example, employees dealing with delivery, employees dealing with customer care, etc. Some jobs in the e-commerce sector do not require many qualifications. So it even extends the employment opportunities to those persons who lack education. It is necessary for the employees to possess skills and have knowledge about their work.
Even though it highly benefits people, certain people, mostly people in rural areas, do not trust buying through e-commerce platform. And also people in rural areas face difficulties due to lack of access to internet, education and awareness. Various companies dealing with e-commerce are coming up with strategies to overcome these problems.
Taxes in India are broadly classified into two. They are direct and indirect taxes. Direct taxes are levied on profit and income earned by any individual or organisation. These are directly payable to the government by the assessee. Income tax, property tax, corporate tax are some examples of direct tax. Indirect taxes are levied on goods and services. Here, the entity upon whom the tax is payable is different from the one who actually pays it. That’s why it is an indirect tax. Goods and Services Tax, also known as GST is an example of indirect tax.
GST has been in effect since July 1, 2017. It includes Central Goods and Services Tax, State Goods and Services Tax and Integrated Goods and Services Tax. Central Goods and Services Tax and State Goods and Services Tax are applicable for intrastate sales whereas Integrated Goods and Services Tax is applicable for interstate sales.GST has subsumed various other indirect taxes which were in force in India before the commencement of GST. Those taxes which were subsumed are VAT/Sales tax, Entertainment Tax, Luxury Tax, Tax on lottery/ betting/ gambling, Octroi, Purchase Tax imposed by the State government and Central Excise Duty, Additional Excise Duty, Additional Customs Duty, Special Additional Duty of Customs, Service Tax, Excise Duty levied under Medicinal and Toiletries Preparations imposed by the Central government. 
GST has definitely made the taxation system simpler. It is now serving as an authority friendly system.
Taxation in e-commerce:
There are several taxes that an E-commerce company has to pay. They are Tax Collected at Source (TCS), and Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) or Integrated Goods and Services Tax (IGST).
TCS means Tax collected at source. It is an income tax which is payable on income and profits. It is payable by the aggregator. Aggregator here, refers to the person who owns and manages the e-commerce platform .This platform would have several other sellers. For example, In Food panda, Voonik, Amazon, Swiggy, etc., you can find several other sellers in a single platform. One can purchase products from the seller they want to .The prices differ according to each seller. The price of a single good may vary among the different sellers. Customers can buy their goods by selecting their desirable seller according to their affordability.
TCS would be collected by the aggregator from the vendors/sellers before making their payment. It means that an aggregator has to receive a certain amount as tax from the sellers before making payment to them. The aggregator usually deducts the tax amount from the amount they have to pay the seller. The tax is payable on each transaction by the seller. The rate the TCS should be charged is 1% as notified in CBIC in Notification no. 52/2018 under CGST Act and in Notification no.02/2018 under IGST Act.
CGST and SGST are applicable to intrastate sales transactions. For example, if the customer is residing at Chennai and orders a book from an e-commerce platform where the seller of the good is also registered in Chennai or Madurai or in any place in Tamil Nadu, then CGST and SGST are applicable. SGST differs from state to state. This CGST and SGST amount will be included in the price of the good or service. It is payable by the customer.
IGST is payable in case of interstate transactions. For example, if the customer is situated at Hyderabad and the seller is registered at Kolkata, then IGST would be applicable. IGST is also paid by the customer.
The GST mainly operates on the principle of ‘Place of Supply”. This means that the jurisdiction of tax is on the place of supply i.e., the place of delivery of goods. But in case of the customer and the person to whom the goods are delivered are different, the place of order is taken into consideration. For example, if a person places an order from Chennai and directs the delivery to Bengaluru, then the place of supply would be taken as Chennai. If the seller is registered at Tamil Nadu, then it would come under intrastate sales and, CGST and SGST would be applicable. If the seller is situated at any place other than Tamil Nadu, then it would come under interstate sales. So, IGST would be applicable.
Should e-commerce be taxed?
This question has been debated for over a long period of time. E-commerce should be taxed for its income and profits just like any other entity even though the taxing process is very complex. It also becomes unfair on the part of normal retailers to get taxed alone since both e-commerce and normal retailers deal with the same type of business with just a different mode. It would also discourage potential retailers to come up with the business.
And also e-commerce should be taxed because in no way they are inferior to the normal retailers and in fact they are the fastest growing sector where we can expect a lot of electronic platforms in the future. Without taxing them, there is a high possibility that potential e-commerce operators would increase in number and the market would be flooded by such operators which would ultimately mess up the sector. The barrier of taxation would restrict the entry which in turn would reduce the potential e-commerce operators to an extent. This would uphold the reliability of the sector which would have been absent in case of no taxation.
Issues regarding Taxation:
There are several issues prevailing in the case of taxation in e-commerce. Even though GST has made the position of E-commerce clear, still some issues prevail. One can group the issues under two heads namely, Indirect tax-related issues and Direct tax -related issues.
- INDIRECT TAX-RELATED ISSUES: The issues that come under indirect tax-related issues are multiple registrations, discounts, double taxation, credit-related transactions, returned goods, and complex compliance procedures. 
1.1Multiple registrations: GST has made registration compulsory for all sellers in e-commerce. The persons liable to pay TCS have to fill in the application form which is FORM GST-07 and has to submit it via online. Within 3 working days from the registration, the concerned authority would issue a certificate of registration in the form of FORM GST-08.The registration of sellers is also necessary. Sellers can sell their products in various e-commerce platforms. This would lead to the problem of multiple registrations.
1.2. Discounts: The treatment of discounts is ambiguous. In some cases, sellers provide for discounts and in some cases, e-commerce companies provide for discounts. Even though there is a reduction in the actual price, the tax authorities usually insist upon charging taxes on the original price of the good. There is no clear cut rule regarding the charging of taxes in case of discounts. Here, taxing at the original price would contradict the basic purpose of giving discounts.
1.3. Double Taxation: Since the income on each transaction will be taxed and the services will also be charged, it leads to double taxation. The taxes are payable to different authorities and some taxes are payable to the central government or to the state government or both. This may serve as a great difficulty for e-commerce companies.
1.4. Credit-related transactions: Charging IGST, CGST and SGST on each transaction actually have restricted credit- related transactions. Transactions on EMI have lessened. Since taxes are levied as percentages, there is a confusion regarding whether the tax has to be charged with interest or without interest. This problem has affected credit-related online transactions.
1.5. Returned goods: This problem is often referred to as reverse logistics. The e-commerce companies often face problems in case of returned goods. It has no other choice than to take back the goods and return the amount. The treatment of taxes in such cases is not clear and it requires an established set of rules and regulations.
1.6. Complex Compliance Procedures: The process of filing GST returns, registration and payment are quite complex and requires a lot of awareness and tutoring. Complex compliance procedures make e-commerce a complex structure which may make this sector undesirable on the part of the owners.
- DIRECT TAX -RELATED ISSUES: The issues that come under direct tax related issues are the determination of taxpayer and determination of jurisdiction. 
2.1. Determination of the taxpayer: The determination of the taxpayer serves as an issue. To charge on income, first of all, there must be an identifiable person to be charged. The first problem that an e-commerce company faces is determining the taxpayers. The aggregator has to pay the tax in the name of the brand and not in his own name. He has to collect the TCS from each seller and has to pay it. The identification of the payer, characterisation of the income and determination of the total amount of taxes is a chaotic process. The seller is usually identified on by the domain name. The person behind the domain name has to be identified.
2.2. Determination of jurisdiction: This is interrelated to double taxation. This is like the next step to the issue of determination of taxpayers. The jurisdiction of taxation has to be determined carefully as there is a presence of double taxation. E-commerce companies have to pay several taxes to the government. The determination of jurisdiction of the taxes is crucial various taxes are paid. This serves as a problem for e-commerce companies.
E-commerce is the fastest- growing sector which is very close to reaching the status of a developed sector. The issues relating to indirect taxes can be overcome through several measures but the issues relating to direct taxes serve as unique characteristics of e-commerce. It can be classified as shortcomes of e-commerce. There must be clear legislation regarding the treatment of discounts and returned goods.
The compliance procedures can be made simpler. There must be awareness programmes regarding the registrations and compliance procedures to overcome those problems. It would not only educate the people involving in e-commerce business but also commoners would be aware of what is exactly happening in the e-commerce sector. They would also understand the difficulties of e-commerce companies. It may also help in cultivating potential investors, sellers and even potential e-commerce platform owners.
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