 "Most corporate tax breaks may be phased out in FY18")
The Uttar Pradesh government is likely to impose 5% entry tax on goods sold by e-commerce companies in the state. The annual trade by e-commerce and e-tailers in UP is estimated at Rs 10,000 crore and is projected to touch Rs 40,000 crore by 2020.
While, several other states such as Uttarakhand, Bihar and West Bengal have already imposed varying tax rates on goods sold over e-commerce platforms, the UP government has so far dithered on the issue.
Now, taking into account the huge sales volumes generated by e-commerce companies and the huge Value Added Tax (VAT) tax potential, the state trade tax department is gearing up for imposing entry tax on the sale of such goods.
Yesterday, UP trade tax commissioner Mukesh Meshram held a meeting with a delegation of big courier companies, which deliver goods in the state.
"In fact, it is the suggestion of the courier companies for the imposition of 5% entry tax on goods sold by e-commerce companies," Meshram told Business Standard adding the state could collect almost Rs 500 crore tax through such transactions during 2016-17.
While, several other states such as Uttarakhand, Bihar and West Bengal have already imposed varying tax rates on goods sold over e-commerce platforms, the UP government has so far dithered on the issue.
Now, taking into account the huge sales volumes generated by e-commerce companies and the huge Value Added Tax (VAT) tax potential, the state trade tax department is gearing up for imposing entry tax on the sale of such goods.
Yesterday, UP trade tax commissioner Mukesh Meshram held a meeting with a delegation of big courier companies, which deliver goods in the state.
"In fact, it is the suggestion of the courier companies for the imposition of 5% entry tax on goods sold by e-commerce companies," Meshram told Business Standard adding the state could collect almost Rs 500 crore tax through such transactions during 2016-17.
Meanwhile, the department is also studying the tax structure in other states on such transactions.
"Several states have either imposed tax on sale of goods over e-commerce or have proposed or actively considering imposing VAT," he informed.
Meshram maintained VAT was the main source of revenue collection at the state level and thus far the e-commerce companies had virtually been enjoying a tax holiday.
"The state infrastructure like road is used in the delivery of goods and although it is a business transaction, there had been no tax imposed in this case," he added.
The trade tax department is considering the legal and administrative aspects of the matter before taking the final call and later recommending the same to the state cabinet for approval.
The process would take some weeks before things are given the final shape and drafted for the state cabinet.
In the past, the state traders and retailers had been demanding a level playing field vis-à-vis e-commerce companies. Their grouse had been while the brick and mortar retailer were required to pay several taxes and duties, the goods sold by e-tailers were comparatively cheaper due to lower or no tax liability. This considerably eroded their competitive edge, the traders had always been alleging.
