Gujarat collects over Rs 2 crore in a month in entry tax from e-tailers

Gandhinagar: From May, the state government has begun collecting

entry tax

on items bought online by consumers from

Gujarat

, and in a month, has been able to collect above Rs 2 crore by taxing e-tailers. State authorities are hopeful that the collection would increase manifold once the government sorts out the online sales and physical check-post tracking system.

The new levy was introduced in this year’s state budget to provide a level playing field to local dealers and to tax e-commerce transactions. The state commercial tax department, however, could not start collecting the tax from April itself due to some technical glitches, said officers.

The entry tax on online purchases is calculated on the basis of difference in VAT rates between Gujarat and the state from where the item was sent. Though some e-tailers have challenged the move in high court, there has been no interim stay on the tax.

Sources said Amazon India is one of the major players currently complying with the tax, while many big e-tailers are taking a wait-and-watch approach, given the cases pending in the high court. The state commercial tax department, however, has asked all e-tailers to shell out entry tax.

P D Vaghela, commissioner, commercial tax department, said, “We have implemented the entry tax on online goods sold in Gujarat from the April 1. However, due to some software issues, we could not collect entry tax for the first few days. The collection was around Rs2 crore in May, but we hope it will increase considerably, as we have allowed companies to set their system.”

“We have asked all the companies to pay advance tax as well as send their weekly sales details. We are cross checking them with the goods movement data at check posts for all online companies. We are charging only the difference between the taxes here and in other states. One or two companies have challenged it in the high court, but the court has not given any stay. So, all the companies have started paying entry tax,” Vaghela added.

How the entry tax is calculated?
The new levy was introduced in this year’s state budget to provide level playing field to local dealers and tax e-commerce transactions. The state has now worked out a formula and decided to charge difference in VAT rates between Gujarat and a state from where a particular product is supplied as entry tax.

“Maharashtra charges 5% VAT on mobile phones and Gujarat has 15% VAT, the difference works out to be 10%. If someone from Gujarat buys a mobile phone through an e-commerce website and it is sold by a dealer in Maharashtra, the e-tailer will have to pay differential 10% as entry tax. The VAT can then be charged from the consumer,” explained a senior government official.