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The Gujarat government has passed a bill to levy entry tax on goods purchased through ecommerce portals.

The Gujarat Tax on Entry of Specified Goods into Local Areas (Amendment) Bill, 2016, was passed in the state assembly on Wednesday.

The bill amended the present Act of 2001 that did not cover ecommerce transactions. As per the government the previous bill affected the local traders as the goods on ecommerce websites  were sold at a much cheaper price as no taxes were levied on these goods.

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While presenting the bill, 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.”

As per the new amendments, the word “importer”, now also covers traders 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.” Henceforth, these reporters are liable to collect the tax from the consumer, and pay it to the government.

The rate of tax imposed and the procedure to be followed will be specified later, through a separate notification.

Other states with taxes on Ecommerce Goods

  • Uttarakhand – In December 2015, the Uttarakhand government had imposed 10% tax on all ecommerce goods entering the state. In response Flipkart filed a case against the state of Uttarakhand for imposing this entry tax on ecommerce goods.
  • Jammu and Kashmir – Tax is levied in case of Non Registered Dealers and Individuals for goods above INR 4,999
  • Maharashtra: The state has an entry tax on ecommerce goods
  • Sikkim and West Bengal: Both the states have 1% tax on ecommerce goods
  • Bihar – Shipments below INR 10,000 have an tax applicable
  • Himachal Pradesh – If the TIN is not mentioned then Entry Tax is levied. A 5% entry tax for individual & non registered dealers, and 3% for government bodies
  • Madhya Pradesh – In his budget speech Madhya Pradesh Finance Minister Jayant Malaiya said the government wishes to impose an entry tax of 6% on goods purchased online to compensate for the loss due to ecommerce
  • Assam – According to recent reports, Assam was also planning to levy tax on ecommerce goods.

Few state governments charge these taxes in form of OCTROI and the amount ranges from 3% to 6% in different states

Prior to this, in October 2015, Flipkart, Amazon and Snapdeal had collectively decided to stop delivering products exceeding INR 5000 in value, in UP and Uttarakhand. The decision was made citing the harassment by tax authorities, wherein buyers needed to file VAT form and provide the details of vehicle shipping good, while purchasing goods from them.

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