B Swaminathan
Gujarat Governent has recently levied an entry tax for the products entering Gujarat purchased online. In the meanwhile e-commerce giant Flipkart sued the Uttarakhand government for the levy of an entry tax, selling goods to various states is about to get difficult for Indian e-commerce companies as more states mull levying the 10% entry tax, a report by Economic Times has said.
Currently, Uttarakhand, Bihar and Assam charge a 10% entry tax on goods bought online and coming into the state from outside. This tax is billed to the courier company, the cost of which will eventually be passed on to the customer.
The State Government intends to provide a level playing field for traders and retailers in the state, as the online discounted good was affecting the local trade. Clarifying the need for the bill, State Finance Minister Saurabh Patel, said, “Due to the recent development in the field of online purchase, web-based software applications or through tele-shopping platforms, which does not attract any tax under the present Act, local businesses were adversely affected.”
The e-commerce players already pay tax in the origin state and along with this, it will be a double taxation for the companies. On one hand while Central Government is easing policies and boosting e-commerce startups, state governments like UP, Uttarakhand are taking steps which will only enhance the ambiguity of the ecosystem and in no way help the companies to grow.
The Gujarat Tax on Entry of Specified Goods into Local Areas (Amendment) Bill, 2016, was passed in the state assembly in the absence of Congress MLAs, who were Tuesday suspended for two days by the Speaker. The bill amended the present Act of 2001 that did not cover e-commerce transactions, which according to the government, was adversely affecting the local traders as the goods coming in the state through such means was sold at a much cheaper rate due to non-payment of any tax.
“Due to the recent development in the field of online purchase, web-based software applications or through tele-shopping platforms, which does not attract any tax under the present Act, local businesses were adversely affected,” state Finance Minister Saurabh Patel said while presenting the bill.
As per the bill, the word “importer”, as specified in the present Act, now also covers those who “bring or facilitate to bring any specified goods for consumption, use or sale in Gujarat from any part of the country using online platforms.”
Further, such importer is now liable to collect the tax from the person (consumer) for whom the goods are brought and pay it to the government in a prescribed manner, as per the bill. This bill was introduced after several trader bodies made representations to the state about online platforms selling “cheap” goods in the absence of a proper tax structure applicable to them.
“The state government would announce the rate of tax as well as other procedures to be followed by the importers through a separate notification,” Patel added.