Jammu and Kashmir government is the latest State to join the pro-entry tax list. Finance Minister Haseeb Drabu recently introduced the Entry Tax on Goods (Amendment) Bill in the state assembly.
The government has proposed that tax should be levied on goods entering J&K through online shopping firms to protect local trade and improve revenue collection. The minister feels that it’s about time to introduce new taxation policies for ecommerce businesses that has picked up in the last few years.
“As per section three of the Entry Tax Act on Goods Act, 2000, entry tax is collected on goods the value of which exceeds Rs 5000. With a change in trend in business techniques online shopping has become common and consumers prefer buying goods from various companies delivering them at the destination booked through their online portals. Statistics collected from the minor checkpost (passenger side only) show that most of the consignments are shown below Rs 5000 and hence no entry tax can be levied. In case of the passenger side minor checkpost at Jammu Railway Station only, per day billing of consignment below the value of Rs 5000 is Rs 15-18 lakhs,” said Drabu.
No limit for entry tax in J&K?
As of now, tax is collected on goods worth more than Rs. 5000. But the J&K government might get rid of any limit to levy entry tax in order to control ecommerce firms’ smart tactics to avoid tax.
The Finance Minister said,
“It is also apprehended that the online delivery is split into several bills so as to reduce the value of invoice to avoid entry tax. For example, if consumer has booked goods for Rs 20,000 and has sought delivery of five goods, separate five invoices showing the value of goods below Rs 5000 value are issued.”
This might force the government to either remove or reduce the limit so that etailers’ don’t get away without paying their dues, local businesses don’t suffer and tax collection is not affected.
Eommerce biggies knock on court’s door
Online sellers have welcomed Gujarat government’s decision to introduce Entry Tax.
“We, All India Online Vendors Association (AIOVA), have been in discussion with the Commercial Taxes Department of Gujarat Government since they announced the entry tax on ecommerce transactions. We welcome this new amendment as it is beneficial to our members in Gujarat and it is educational to our members out of Gujarat as they were not aware that entry tax was applicable on their products since the time of inception of Gujarat VAT act,” says Secretary of AIOVA.
Buyers too are unfazed and won’t stop shopping online due to entry tax.
With one more state added to the list, how will etailers fight this and for how long? Who will win – state governments or ecommerce companies?