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U'Khand, Assam & Bihar impose entry tax on online purchase

Ecommerce companies alege it as discriminatory amd unconstitutional

Policy Pulse
Publish Date: Mar 15 2016 12:04PM | Updated Date: Mar 15 2016 4:12PM

U'Khand, Assam & Bihar impose entry tax on online purchase

 Ecommerce players are crying foul as several states start imposing entry tax on goods purchased online, which the industry alleges is 'discriminatory' and even 'unconstitutional'. 

Uttarakhand, Bihar and Assam have already imposed an entry tax — a tax states impose on goods coming in from another state — on goods purchased online. Almost half-a-dozen other states, including Gujarat, Madhya Pradesh and Rajasthan, are considering a similar levy. 
Ecommerce companies have alleged that this levy, which is imposed on the courier agent delivering the goods, leads to substantial increase in prices of goods sold online since it amounts to double taxation, and said they are mulling judicial remedy individually as well as collectively. 
An industry official said entry tax is erroneously being applied on ecommerce firms and that states were looking for easy ways of garnering revenues even as the goods & services tax ( GST) is being delayed. "The decision to impose such a levy without any ostensible justification seems not to be driven by clean hands. The governments seem to be catering to various retail lobbies, which failed to stop ecommerce otherwise," the official said, seeking anonymity. 
Goldman Sachs has projected that India's online retailing market, which is already one of the largest in the world, will expand to $69 billion in 2020 from $23 billion in 2016. Over the past month or so, entry tax on ecommerce purchases found mention in the Budget speeches of Gujarat, Madhya Pradesh and Rajasthan.
Madhya Pradesh Finance Minister Jayant Malaiya in his Budget speech said the government wishes to impose an entry tax of 6% on goods purchased online to compensate for the loss due to ecommerce. It is estimated that 20-30% of the state's commerce has shifted online.