According to a senior finance ministry official, the committee will give its report by October so that the recommendations can be discussed while preparing the next year's budget.

The official said that the committee on e-commerce was studying wide-ranging views on the subject and was also in regular touch with the international developments in this regard.

The government will take a decision on taxing e-commerce after analysing the report of the committee, he said.

The high-powered technical committee was set up by the finance ministry in December last year to look into various aspects of e-commerce taxation. It has five members from the revenue department and two-each from the information technology industry and accountancy profession. Chief commissioner of income-tax (Jaipur) Kanwarjit Singh is the convenor of the committee.

Sources said that the committee was taking a comprehensive look at e-commerce taxation issues and would also recommend on the possibility of imposing e-commerce tax in the next budget as well as the changes required to achieve this objective.

They said that the high-powered committee was analyzing the possibilities of imposing tax on e-commerce in the existing scenario and if it found that the current tax laws were inadequate to handle e-commerce then the committee will give its suggestions on the possible changes.

Interestingly, tax departments world-wide are finding it difficult to devise a mechanism which can tax e-commerce successfully. The existing taxation infrastructure have proved to be inadequate to meet the requirements of the complex issue of taxing business done through the internet.

Experts feel that the current infrastructure which includes various laws and regulations, taxation policies, commercial laws and transaction processes in India too are neither adequate nor suitable to deal with the emerging e-commerce environment.

E-products being capable of delivery from one place to another through computer communication under the existing framework of cross-border transactions, lack of guidelines and policy will create lot of problems in terms of taxability of income from e-commerce.

Officials feel that clear and transparent guidelines for taxing income from e-commerce was a necessity if the country opts for taxing this mode of business in near future.

The guidelines are particularly required for service sector which was growing very fast in India as well as in other parts of the world.

The critical issue involved with the taxation of services through internet is the place of tax liability of such income.

The OECD model of e-commerce taxation provides that the place of taxation should be the place where the services are rendered. Experts feel that as far as possible, India should follow the OECD model for taxing e-commerce.