More states may follow Uttarakhand lead, impose entry tax

A day after ecommerce giant Flipkart sued the Uttarakhand government for the levy of a 10-per cent entry tax on goods shipped from outside the state, business for ecommerce companies is set to get more difficult in other states as well, as they are considering levying a similar tax, according to a report in The Economic Times.

Currently, Uttarakhand, Bihar and Assam charge a 10 per cent entry tax on goods bought online and shipped in from outside the state. This tax is billed to the courier company, and the cost is eventually passed on to the buyer.

According to the report, Gujarat, Madhya Pradesh and Rajasthan are also planning to impose a similar tax.

Flipkart sued Uttarakhand, filing the petition through its in-house logistics arm EKart Logistics, in the Uttarakhand High Court in Nainital, calling the imposition ''discriminatory''. Other ecommerce companies are planning to appeal against the levy individually and collectively, the report says.

The 10-per cent entry tax comes at a time when the government is pushing for the passage of the Goods & Services Tax bill to standardise the tax regime across the country.

The entry tax levy has been called "discriminatory", "anti-consumer", and "against the public interest" by various participants of the industry.

The ET report quotes Sudhanshu Gupta, vice-president (business) at Paytm, as saying, "These kinds of levies act as a major deterrent for sellers from different parts of the country who have been traditionally supplying to showrooms in the state and are now selling directly to consumers."

Flipkart's case is scheduled to be heard next week.