Gujarat to levy tax on e-commerce transactions

31 Mar '16

3 min read

Barely two weeks after e-commerce major Flipkart dragged the Uttarakhand government to court for imposing a 10 per cent entry tax in the state on goods purchased from e-commerce firms, the Gujarat government passed a similar bill on Wednesday.

The bill proposes to levy entry tax on goods purchased through e-commerce portals. The government claims the bill was necessary to provide a level playing field for traders and retailers in the state. The rate of tax is yet to be decided.

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 suspended on Tuesday 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.

According to 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.

The 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.

Maharashtra, Bihar and Karnataka also have an entry tax on e-commerce goods.

E-commerce companies had earlier 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. (SH)

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