Are there any e-commerce taxation rules in India?
There are no clear guidelines. If you are selling as individual, then what ever profit you make gets added to your overall income as you pay tax accordingly. This is true for sole proprietor or partnership kind of firms. If you are registered as a Company, the profits are taxed as business income. There may be VAT and other taxes. Please consult a CA who can guide you in specifics as for eCommerce, there is no defined law and one has to interpret various other tax laws.
"TL;DR - my understanding of the rules is that if you are required to register for GST (earning more than $75k per annum), you would be required to pay GST on these items. To clarify firstly: taxable income, and goods and services tax, are two different things. Any income you receive needs to be considered for income tax purposes - whether or not it ends up being taxable income would be too much to go into here, but generally you would take your expenses, and any deductions, away from your income to arrive at what would generally be the taxable amount. An accountant will help you do this. Income tax is paid by anyone who earns income over the tax free threshold. By contrast, goods and services tax is a tax paid by business (of which you are running one). Of course, this is passed on to the consumer, but it's the business that remits the payment to the tax office. However, GST isn't required to be charged and paid in all cases: The key in your situation is first determining whether you need to register for GST (or whether indeed you already have). If you earn less than $75,000 per year - no need to register. If you do earn more than that through your business, or you have registered anyway, then the next question is whether your items are GST-free. The ATO says that ""some education courses [and] course materials"" are GST-free. Whether this applies to you or not I'm obviously not going to be able to comment on, so I would advise getting an accountant's advice on this (or at the very least, call the ATO or browse their legal database). Thirdly, are your sales connected with Australia? The ATO says that ""A sale of something other than goods or property is connected with Australia if ... the thing is done in Australia [or] the seller makes the sale through a business they carry on in Australia"". Both of these appear to be true in your case. So in summary: if you are required to register for GST, you would be required to pay GST on these items. I am not a financial advisor or a tax accountant and this is not financial advice." I am an Israeli based citizen who represents and Indian company who sells its products in Israel. As an agent I am entitled to commission on sales on behalf the Indian company who advised that. Any commission paid to you will be applicable to TDS at 20.9% of the commission amount, the tax will be paid and a Tax paid certificate will be given to you.   According to a Bilateral Double tax avoidance treaty if the tax has been deducted in India you will get credit for this tax in Israel. "Believe it or not, unless you directly contact an accountant with experience in this field or a lawyer, you may have a tough time getting a direct answer from a reputable source.  The reason is two fold.  First, legally defining in-game assets is exceptionally difficult from a legal/taxation stand point.  Who really owns this data?  You or the company that has built the MMO and manages the servers containing all of the data? You can buy-and-sell what is effectively ""data"" on their servers but the truth is, they own the code, the servers, the data, your access rights, etc. and at any point in time could terminate everything within their systems.  This would render the value of your accounts worthless! As such, most countries have overwhelmingly avoided the taxation of in-game ""inventory"" because it's not really definable.  Instead, in game goods are only taxed when they are exchanged for local currency.  This is considered a general sale.  There may be tax codes in your region for the sale of ""digital goods"".  Otherwise, it should be taxed as sale a standard good with no special stipulations. The bottom line is that you shouldn't expect to find much reliable information on this topic, on the internet.  Law's haven't been welled defined, regarding in-game content worth and taxing of sales and if you want to know how you should pay your taxes on these transactions, you need to talk to a good accountant, a lawyer or both." Yes you need to pay taxes in India. Show this as other income and pay tax according to your tax bracket. Note you need to pay the taxes quarterly if the net tax payable is more than 10,000. Apparently Amazon's legal team that is battling to prevent online retailers from getting taxed was not consulted as to whether an idea like this would look *really* bad for their case. It's brilliant, but a wee bit diabolical. Brick and mortar retailers really have no recourse against something like this. Are there any IRS regulations I should be aware of when sending money to India? None. As long as you are following the standard banking channels. You are also declaring all the accounts held outside US in your tax returns. FBAR. Is it legal to do so?  Yes it is legal. do I have to declare how much I am investing and pay extra taxes? As part of FBAR. Income earned [including interest, capital gains, etc] needs to be paid in India [there are some exemptions for example interest on NRE accounts] as well as in the US [relief can be claimed under DTAA Indian version here and US here]. So if you already have paid taxes on salary and say transfer USD 10K to India; there is no tax on this 10K. If this 10K generates an income of say 2K; this 2K is taxable as per normal classification and rules. "Tax is often calculated per item.  Especially in the days of the internet, some items are taxable and some aren't, depending on the item and your nexus.  I would recommend calculating and storing tax with each item, to account for these subtle differences. EDIT: Not sure why this was downvoted, if you don't believe me, you can always check with Amazon: http://www.amazon.com/gp/help/customer/display.html/ref=hp_468512_calculated?nodeId=468512#calculated I think they know what they're talking about. FINAL UPDATE: Now, if someone goes to your site, and buys something from your business (in California) and the shipping address for the product is Nevada, then taxes do not have to be collected.  If they have a billing address in California, and a shipping address in Nevada, and the goods are shipping to Nevada, you do not have to declare tax. If you have a mixture of tangible (computer, mouse, keyboard) and intangible assets (warranty) in a cart, and the shipping address is in California, you charge tax on the tangible assets, but NOT on the intangible assets. Yes, you can charge tax on the whole order.  Yes for most businesses that's ""Good enough"", but I'm not trying to provide the ""good enough"" solution, I'm simply telling you how very large businesses run and operate.  As I've mentioned, I've done several tax integrations using software called Sabrix (Google if you've not heard of it), and have done those integrations for companies like the BBC and Corbis (owned and operated by Bill Gates). Take it or leave it, but the correct way to charge taxes, especially given the complex tax laws of the US and internationally, is to charge per item.  If you just need the ""good enough"" approach, feel free to calculate it by total. Some additional reading: http://en.wikipedia.org/wiki/Taxation_of_Digital_Goods Another possible federal limitation on Internet taxation is the United States Supreme Court case, Quill Corp. v. North Dakota, 504 U.S. 298 (1992),[6] which held that under the dormant commerce clause, goods purchased through mail order cannot be subject to a state’s sales tax unless the vendor has a substantial nexus with the state levying the tax.  In 1997, the federal government decided to limit taxation of Internet activity for a period of time. The Internet Tax Freedom Act (ITFA) prohibits taxes on Internet access, which is defined as a service that allows users access to content, information, email or other services offered over the Internet and may include access to proprietary content, information, and other services as part of a package offered to customers. The Act has exceptions for taxes levied before the statute was written and for sales taxes on online purchases of physical goods." So isn't this a success? It was implemented by taxation teams to ensure that non taxable transactions could no longer occur, and now they aren't. On the corruption side, everything is electronic and traceable now. Sounds like it is working as intended. It looks like businesses selling services (like software downloads) from outside the EU to the UK have to register for VAT if the amount of such sales goes over the UK VAT registration threshold: [If] the value of the taxable supplies you make is over a specified   threshold [then] you must register for VAT So it seems plausible that this business does have some requirement to charge VAT on its sales, but clearly it should have done so at the time of sale, not months later. As you say, UK and EU law require that prices are displayed including relevant taxes. Since this business is in the US, they might be able to claim that those rules don't apply to them. But I'm not aware of even US businesses being able to claim sales tax from a US customer months after originally making a sale, and it goes against all reasonable principles of law if they would be able to do it. So the business should really just accept that they screwed up and they'll now have to take the hit and pay the tax themselves. They can work as if the pre-tax price was $12.99/1.2 = $10.825, leaving $2.165 they need to hand over to HMRC. I don't think there's any legal way they can demand money from you now, and certainly for such a low sum of money there's no practical way they could. I can't find anything definitive one way or the other, but I suppose it's possible that HMRC would consider you the importer under these circumstances and so liable for the VAT yourself. But I don't know of any practial way to actually report this to HMRC or pay them the money, and again given the amount there's no realistic chance they'd want to chase you for it. In your shoes I would either ignore the email, or write back and politely tell them that they should have advertised the cost at the time and you're not willing to pay extra now. And you might want to keep an eye on the card you used to pay them to make sure they don't try to just charge it anyway. EDIT: as pointed out in a comment, the company behind this (or at least one with a very similar problem and wording in their emails!) did end up acknowledging that they can't actually do this and that they'll need to pay the tax out of the money they already collected, as I described above. It seems they didn't contact the people they originally emailed to let them know this, though. There's some more discussion here. But why can't two companies exchange goods directly without paying VAT? This would make the famous carousel fraud scam impossible and businesses won't have to deal with complicated refunds. Sales tax in the United States works as you describe.  Sales tax is charged only to end customers, not to businesses that themselves charge sales tax.  But this means that a criminal business can charge tax and just pocket it unless someone else reports it.  They can also evade income tax the same way.  Not to mention other issues like cross jurisdiction taxes (e.g. internet sales often evade sales tax).   The whole point of a Value Added Tax (VAT) is that they charge at each level.  This creates a system where each buyer reports the tax paid to the seller so as to be able to deduct it.  So the seller has to pay the VAT that they charged.  Or the tax authorities know and can revoke their VAT license.   If only the end user is charged tax, then fraud is easier than under a VAT.  So easy, I doubt they have a special name for it.  The fraudulent business just collects tax from end users and disappears.  Or simply fails to record those transactions.  You could call it missing transaction record fraud, but why bother?  It's just straight up tax fraud.  The complexity of the carousel fraud arises from the difficulty of evading a VAT. I don't know how taxes work in Israel, but I imagine it is relatively similar to taxes in the US. In the US you need to pay taxes on investment earnings when you sell them or in this case trade them for something of value. The amount that would typically would be taxed on would be the difference between how much you paid for the currency and the value of the item you traded it for.  In theory there shouldn't be any difference in trading bitcoins versus dollars or euros. Reality is that they are rather weird and I don't know what category they would fall into. Are they a currency or a collectors item? I think this is all rather hypothetical because there is no way for any government to track digital currencies and any taxes paid would be based on the honor system.  I am not an account and the preceding was not tax advice... I am from India. I visited US 6-8 times on business VISA and then started 2 Member LLC. Myself and My wife as LLC Members. We provide Online Training to american students from India. Also Got EIN number. Never employed any one. Do i need to pay taxes? Students from USA pays online by Paypal and i am paying taxes in India. Do i need to pay Taxes in US? DO i need to file the Tax returns? Please guide me. I formed LLC in 2010. I opened an Office-taken Virtual office for 75 USD per month to open LLC in 2010. As there is physical virtual address, am i liable for US taxes? All my earning is Online, free lancing. Is the VAT scam still on the go? I was under the impression that amazon have to pay vat according to the country the items are shipped to, not shipped from? It will be a complete fuck up on the part of our politicians if this loophole has not been closed yet. Tax is due in India as you offered services from India.  So whether the International Client pays via Credit Card, Bank Transfer, Paypal or any other means is not relevant. Even if the International Client pays you in a account outside India; it is still taxable in India. Can I give the bank the $300,000 to clear the mortgage, or must I pay off the total interest that was agreed upon for the 30 year term? This depends on the loan agreement.  I had one loan where I was on the hook regardless.  Early payment was just that, early payment.  It would have allowed me to skip months without making payments (because I had already made them).   Most loans charge interest on the remaining balance. If you pay early, it reduces your balance, decreasing the interest.  If you pay it off early, there's no more balance and no more interest.   I'm curious why the bank would let you do this, since they will lose out on a lot of profit. But they have their money back and can loan it out again.  If they maintained the loan, they aren't guaranteed of getting their money.   Interest is rent that you pay for the loan of the money.  Once you return the money, why pay more rent?  While some apartment leases require paying through the entire term, most allow for early termination with proper notice.  You give back the apartment; the landlord rents it out again.  Why should they get paid two rents?   Another issue is that if someone with a mortgage switches jobs to a new location, that person will likely prefer to sell the current house and buy one in the new location.  This is actually the typical way for a mortgage to end.  If the bank did not allow that, they would essentially force the family to rent out the mortgaged house and rent a new house.  So the bank would go from an owner-occupied house that the inhabitants want to keep maintained to a rental, where the inhabitants only care to the extent of their legal liability.   Consider the possibility that the homeowners lose one of their jobs.  They can't afford the house.  So they sell it and close out the mortgage.  Should the bank refuse to allow the sale and attempt to recover the interest from the impoverished homeowners?  That situation would almost guarantee an expensive foreclosure.   Once there is any early termination clause for any reason, it makes sense for the bank to structure the loan to include the possibility.  That way they don't have to investigate whatever excuse is involved.  Loan regulators may require this as well, particularly on mortgages.