{"id":48014,"date":"2024-05-09T12:23:52","date_gmt":"2024-05-09T06:53:52","guid":{"rendered":"https:\/\/www.techjockey.com\/blog\/?p=48014"},"modified":"2024-05-28T13:29:24","modified_gmt":"2024-05-28T07:59:24","slug":"how-to-file-digital-taxation-in-india","status":"publish","type":"post","link":"https:\/\/www.techjockey.com\/blog\/how-to-file-digital-taxation-in-india","title":{"rendered":"How to File Digital Taxation in India"},"content":{"rendered":"\n
\n
Summary:<\/strong> Are you excited about the idea of going digital with your business in India? If so, allow this comprehensive guide to walk you through the steps involved in filing your digital taxes, which is an essential component of the country’s online sales. Learn more about the taxes that are applicable to companies\u2014both residents and non-residents\u2014that sell goods and services to Indian customers online.<\/p>\n<\/div>\n\n\n\n
India is just one of the many countries in the world where the digital age has fundamentally changed how we manage our money and do business. From online shopping sprees to cryptocurrency trades, these activities are great contributors to a nation’s overall economic growth.<\/p>\n\n\n\n
However, with this digital expansion comes the issue of taxes. The majority of us are concerned about making sure that the money made in virtual world is taxed fairly. That said, now is the time to put an end to our worries!<\/p>\n\n\n\n
This blog aims to be your one-stop guide to filing digital taxation in India. We’ll look at the most recent rules, try to grasp different types of digital income, and guide you through the filing process. This blog will equip you with the knowledge to navigate the ever-evolving landscape of digital taxation in India.<\/p>\n\n\n\n
<\/span>Understanding Digital Income and Taxable Categories<\/span><\/h2>\n\n\n\n
The digital economy of India continues to thrive, with e-commerce websites growing by leaps and bounds and cryptocurrencies gaining popularity unlike anything seen in the past. Nevertheless, with this digital transformation also come fresh tax regulations.<\/p>\n\n\n\n
Both online sellers and inquisitive digital currency investors have quite a hard time understanding India’s digital tax system. If you wish to learn everything there is to know about digital taxes in India, this exhaustive guide is here to offer invaluable assistance.<\/p>\n\n\n\n
Let’s first clarify what digital income in India actually means. So it comprises earnings generated from eCommerce activities, cryptocurrency transactions and digital advertising services:<\/p>\n\n\n\n
\n
E-commerce Activities:<\/strong> This includes earnings from in-app purchases, income (or commissions) from marketplaces, and sales made online.<\/li>\n\n\n\n
Cryptocurrency Transactions:<\/strong> This covers the taxable gains from the sale of digital assets, such as Bitcoin and Ethereum.<\/li>\n\n\n\n
Digital Advertising Services:<\/strong> Online advertising or marketing networks that are active in India may have to pay the Equalisation Levy.<\/li>\n<\/ul>\n\n\n\n
The tax category that your digital revenue falls under depends mainly on how it is generated. The two primary categories are given as follows:<\/p>\n\n\n\n
\n
Business Income:<\/strong> Profits gained from operating a digital currency trading business or running an online store are categorised as business profits (PGBP<\/strong>). These are typically taxed according to the applicable tax bracket.<\/li>\n\n\n\n
Capital Gains:<\/strong> The proceeds from the sale of virtual digital assets, or VDAs, are taxed at a fixed rate of 30% if a person holds them as long-term investments.<\/li>\n<\/ul>\n\n\n\n
<\/span>The Two Faces of Digital Taxation in India<\/span><\/h2>\n\n\n\n
The two main parts of India’s digital tax structure are as follows:<\/p>\n\n\n\n
<\/span>1. Equalisation Levy (EL)<\/span><\/h3>\n\n\n\n
The Equalisation Levy (EL) is a tax imposed on non-resident e-commerce companies that sell digital products and services to Indian consumers. It was first introduced in 2016. It is now set at 2% of the money that the e-commerce operator has received or is owed.<\/p>\n\n\n\n
This means that any foreign company selling digital goods or services in India and exceeding a certain revenue threshold must pay this tax.<\/p>\n\n\n\n
<\/span>2. Taxation on Cryptocurrency<\/span><\/h3>\n\n\n\n
A flat 30% tax on income from the sale of VDAs, including cryptocurrencies, NFTs, and other assets, was introduced by GoI in its 2022 budget. It must be noted that whether the revenue is categorised as capital gains or business income has no impact on the application of this tax.<\/p>\n\n\n\n
<\/span>How to File Digital Taxation in India?<\/span><\/h2>\n\n\n\n
The procedures for submitting digital taxes in India are given as follows:<\/p>\n\n\n\n
<\/span>1. For E-commerce Businesses<\/span><\/h3>\n\n\n\n
\n
Registration:<\/strong> You must register with the Indian tax authorities if your online store is subject to the EL regulations.<\/li>\n\n\n\n
Tax Deposit:<\/strong> The EL needs to be deposited quarterly with the Indian government. Record-keeping: Keeping thorough records of all transactions is essential for compliance.<\/li>\n<\/ul>\n\n\n\n
<\/span>2. For Cryptocurrency Platforms<\/span><\/h3>\n\n\n\n
\n
TDS Deduction:<\/strong> Cryptocurrency exchanges and platforms operating in India are responsible for deducting TDS (tax deducted at source) at 1% on payments made for buying VDAs.<\/li>\n\n\n\n
TDS Reporting:<\/strong> This deducted TDS needs to be reported to the tax authorities.<\/li>\n\n\n\n
Record-keeping:<\/strong> Similar to e-commerce businesses, maintaining proper records of transactions is essential for cryptocurrency platforms.<\/li>\n<\/ul>\n\n\n\n
<\/span>How to File Your Digital Tax Returns?<\/span><\/h2>\n\n\n
\n<\/figure><\/div>\n\n\n
The digital tax return filing method is primarily determined by the income group your earnings fall under. The two main ones are as follows:<\/p>\n\n\n\n
\n
Business Income:<\/strong> You need to fill out an ITR Form 3 if your cryptocurrency trading or e-commerce sales qualify as business income. Do not forget that before filing, businesses with turnover above the designated threshold must have an audit of their books.<\/li>\n\n\n\n
Capital Gains:<\/strong> You ought to declare the revenue from selling VDAs as long-term investments on your ITR form (ITR-2 or ITR-3, depending on your income) under the heading “Schedule VDA.”<\/li>\n<\/ul>\n\n\n\n
<\/span>Simplifying Tax Compliance with Swipe Billing<\/span><\/h2>\n\n\n\n
Keeping up with digital taxation compliance while managing digital transactions can be a hard nut to crack. This is where Swipe Billing, the excellent no-cost GST billing tool, comes into play.<\/p>\n\n\n\n
E-commerce companies and other digital enterprises may simplify tax filing and optimise their operations with the aid of swipe billing.<\/p>\n\n\n\n