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Electronic Commerce or E-Commerce as it is popularly known is a natural development, which has followed in the footsteps of the Internet. The Internet is like a shop, which is permanently open, all 24 hours and all 365 days in a year. This makes the Internet the ideal place to do business in. In this kind of an electronic shop, there is no requirement of a shopkeeper or a cashier or a security guard. Further, the shop can be accessed by anybody in any part of the world. It also does away with the necessity of having an expensive piece of real estate and furnishing the same. All these attractive features have made the Internet an immensely popular place to set up shops.
In India, E-commerce is not as widely popular or prevalent as in the western countries. The main reason for this is that at present, it is not possible to make payments by credit card through the Internet. Once the credit card companies are in a position to offer the cardholders some kind of assurance about the security aspect of making payments via the Internet, the volcano of E-commerce will erupt with a force that will shake the entire Indian business scenario. Even today, there are already several outlets that have set up their own web sites and who accept purchase orders through the Internet. A popular super market in New Delhi, several cinema hallsin Mumbai, numerous book shops in many cities are some such examples of businesses which have already started making use of Internet for commercial purposes. Thus, for example, one can book tickets of a film running at a particular cinema hall through the internet and then go to the hall a few minutes before the show, identify one’s self and get the tickets without having to wait for hours in a queue.
E-commerce throws up several new challenges. The most important issue that is thrown up by such commerce is that of taxation. For taxation purposes, the first question that has to be addressed is where did the sale take place? Since there is no physical form of the place of business in case of E-commerce, it becomes difficult to determine the country/state/city from where the sale was concluded. Accordingly, jurisdictional disputes arise about the taxation of the same especially with respect to indirect taxes. Even the most advanced nations such as U.S.A, Japan, France, and U.K have not yet been able to satisfactorily solve this problem. Similarly, another problem that arises is about the transaction escaping the tax net all together. Since there is no paper work involved and all the interaction between the buyer and the seller is done electronically, there is a possibility of the transaction being kept out of the books of account of either or both sides of the transaction. As auditors, Chartered Accountants would have to deal with this problem increasingly as E commerce takes firm roots in India. Another problem area of E-commerce is regarding fraud detection. E-commerce comes to us along with the in-built dangers of electronic crimes and frauds. Detection and Prevention of such frauds would be an area of great concern.
Some more areas where Charted Accountants would be called upon to lend their expertise would be:
(a) Internet web site security-web trust audit;
(b) Knowledge of encryption techniques;
(c) Attesting integrity of databases;
(d) Interpretation of new tax laws covering E-commerce.

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