After Uttarakhand, Several Other States Consider Entry Tax on Online Goods

By siliconindia | Thursday, 17 March 2016, 11:37 Hrs

"The practice smacks of some kind of predatory tax regime which is being promoted by some states." said Subho Ray, president of the Internet & Mobile Association of India.

The levy of an entry tax on ecommerce goods in Uttarakhand recently led the nation’s ecommerce giant Flipkart to sue the state government. Flipkart addressed this act of the state government as "discriminatory" filing a writ in the high court of Uttarakhand.

Indian ecommerce sector is predicted to shoot up to $69 Bn by 2020 from the current $23 Bn in 2016, as per Goldman Sachs. These taxes were also put forward in recent budget speeches where at one instance Jayant Malaiya, Finance Minister, Madhya Pradesh mentioned of imposing a tax of 6percent on the good purchased from online as a compensation of revenue lost with 20-30 percent of the state's commerce moving online.

In addition to this, Gujarat Finance Minister Saurabh Patel’s Budget speech included, "Trade of dealers of the state is affected adversely as also the state suffers loss of tax revenue due to sale of goods through supplies in the state from outside the state under ecommerce transactions. By capturing such transactions under the entry tax, the dealers of the state would get level playing field,"