According to ministry sources, the committee will have top IT brains besides senior officials from the revenue department.

The sources said such a committee is necessary as e-commerce taxation has puzzled governments throughout the globe and no comprehensive method has been developed to tax the business through internet till date despite a manifold rise in trading and servicing through this mode.

Various estimates suggest that, anticipated sales of tangibles on the net is expected to cross $ 5 billion by the turn of the century and revenue from the services and advertising will cross $ 10 billion by that time.

Finance ministry sources said that with Cabinet giving its nod to the IT Bill, business through e-commerce is expected to grow manifold in the country after the Bill is passed by the Parliament.

They pointed out thatit has now become a necessity to decide very soon what approach the country should take to tax e-commerce. We will have to choose an effective method quickly, they added.

Officials said that enforcement of a presumptive tax on the basis of telecommunication billing, popularly known as Bit tax, may not match the commercial payment involved in the transaction and a more competent method for taxation is required.

However, any comprehensive method of e-commerce taxation would require modifications in double taxation agreements with other countries.

At present, taxation laws of various countries including India ensure levy of tax on trade which constitute `physical establishment' of tangible goods or actual movement of person to perform service at a particular location.