Himachal Pradesh imposes 5% Entry Tax on Online Purchases

The Himachal Pradesh state government is all set to levy an additional 5% Entry Tax on delivery providers, like courier or postage service providers, for the goods purchased through online shopping.

The decision was notified by the Government on Tuesday. The bill was brought in the state assembly in last monsoon session and the Governor had ratified it recently.

Earlier, the government had received reports of major tax evasion through online shopping, as the goods were delivered to the consumers without being taxed in the state.

The state assembly had amended the Himachal Pradesh Value Added Tax Rules, 2005, and a new section (59-A) was inserted, under which the application for registration has to be submitted by the carrier of goods (courier agent or any other person in-charge of the goods) electronically, through the official website.

Reportedly, the tax has been implemented from Feb 1, 2017. Answering a query on expected projection of revenue from the new tax, State Additional secretary for Finance, Shrikant Baldi said that at present no targets had been fixed under the head but the new tax would definitely be an addition to the revenue of the state.

“The notification proposes registration procedure and process of submission of returns by carrier of goods and agent of transport companies under the VAT Rules, 2005 and levying five percent uniform cess on e-commerce which will cover online purchases by inserting new forms,” he said.

Baldi said online shopping has a share of around 6 to 7 percent of the total sales in Himachal Prdesh, which is likely to gain boon in the times to come. And the online purchase is causing a dent of around 360 crore in the VAT or sales tax collection in the state. He said that the new tax would compensate this loss to some extent. The state excise contributes around Rs 1044.14 Crore while the state earns Rs360 Cr from Octroi and 110 from transport tax.