How to File Digital Taxation in India

How to File Digital Taxation in India-feature image
May 9, 2024 6 Min read

Summary: 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—both residents and non-residents—that sell goods and services to Indian customers online.

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.

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!

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.

Understanding Digital Income and Taxable Categories

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.

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.

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:

  • E-commerce Activities: This includes earnings from in-app purchases, income (or commissions) from marketplaces, and sales made online.
  • Cryptocurrency Transactions: This covers the taxable gains from the sale of digital assets, such as Bitcoin and Ethereum.
  • Digital Advertising Services: Online advertising or marketing networks that are active in India may have to pay the Equalisation Levy.

The tax category that your digital revenue falls under depends mainly on how it is generated. The two primary categories are given as follows:

  • Business Income: Profits gained from operating a digital currency trading business or running an online store are categorised as business profits (PGBP). These are typically taxed according to the applicable tax bracket.
  • Capital Gains: 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.

The Two Faces of Digital Taxation in India

The two main parts of India’s digital tax structure are as follows:

1. Equalisation Levy (EL)

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.

This means that any foreign company selling digital goods or services in India and exceeding a certain revenue threshold must pay this tax.

2. Taxation on Cryptocurrency

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.

How to File Digital Taxation in India?

The procedures for submitting digital taxes in India are given as follows:

1. For E-commerce Businesses

  • Registration: You must register with the Indian tax authorities if your online store is subject to the EL regulations.
  • Tax Deposit: The EL needs to be deposited quarterly with the Indian government.
    Record-keeping: Keeping thorough records of all transactions is essential for compliance.

2. For Cryptocurrency Platforms

  • TDS Deduction: Cryptocurrency exchanges and platforms operating in India are responsible for deducting TDS (tax deducted at source) at 1% on payments made for buying VDAs.
  • TDS Reporting: This deducted TDS needs to be reported to the tax authorities.
  • Record-keeping: Similar to e-commerce businesses, maintaining proper records of transactions is essential for cryptocurrency platforms.

How to File Your Digital Tax Returns?

How to File Your Digital Tax Returns

The digital tax return filing method is primarily determined by the income group your earnings fall under. The two main ones are as follows:

  • Business Income: 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.
  • Capital Gains: 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.”

Simplifying Tax Compliance with Swipe Billing

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.

E-commerce companies and other digital enterprises may simplify tax filing and optimise their operations with the aid of swipe billing.

Swipe – Billing Software

Here’s how Swipe Billing can serve as your one-stop shop for online taxes:

  • Real-time Tracking: Swipe Billing tracks your sales, purchases, and estimates in real-time. This gives you a clear picture of your income and expenses.
  • Inventory Management: You can make the most of the Swipe Billing software and manage your inventory with utter ease. The programme streamlines tax computations and guarantees accurate record-keeping.
  • GST Return Filing: With Swipe Billing’s easy-to-use interface, filing your GST or digital tax returns becomes a piece of cake.
  • Professional Invoicing: You can create and send out professional invoices to your clients via Swipe Billing. This guarantees a paperless process and transparency.

E-commerce companies and cryptocurrency platforms can spend more time growing their companies and less time on paperwork by taking advantage of Swipe Billing’s free services. Never forget how important it is to keep up with the most recent changes to the digital tax laws.

Speaking with a tax expert can help you receive tailored advice based on your unique situation. On the other hand, if you make proper use of the knowledge provided in this guide and the desirable tools that Swipe Billing provides, dealing with Indian digital taxes may become effective and painless.


India’s digital economy is experiencing rapid development, and with it comes the need to pay certain additional taxes. Thank goodness, you now know how to handle the country’s digital tax scene with ease. That being stated, always keep in mind that knowledge and compliance are both necessary for the best outcomes!

For an even better and more seamless digital taxing experience, you might consider tapping into an all-inclusive platform like Swipe Billing. It streamlines tax filing and record-keeping so you can focus on what truly matters—growing your digital business. So take advantage of the opportunities presented by such state-of-the-art tools and enter the future of Indian online trade with unflinching confidence!

Written by Techjockey Team

The Techjockey content team is a passionate group of writers and editors dedicated to helping businesses make informed software buying decisions. We have a deep understanding of the Indian software market and the challenges that businesses face when choosing the right software for their needs. We are committed... Read more

Still Have a Question in Mind?

Get answered by real users or software experts

Talk To Tech Expert