Bihar High Court has delivered a landmark judgment for the e-commerce industry. This is a major win for the online sellers who are paying the entry tax for the goods that are sold in the states. Bihar state government also faced another defeat in the court regarding the ban alcohol decision.
As per the Indian tax system, every state in India has its tax rate apart from the common Central taxes. In one or the other name, the state governments are levying the taxes on goods for the online sellers.
Flipkart has filed a case against various state governments challenging the tax systems. Bihar today delivered the verdict in online seller’s favor.
Earlier, Bihar has imposed a compensatory tax as per Bihar Finance Act, 2015. Now, with this verdict, the tax can be eradicated. The court has clearly stated that the tax levied is unconstitutional and illegal. This will help in bringing down the prices of the goods.
Madhya Pradesh imposed 6% tax, and Uttarakhand has imposed 10% tax, Gujarat and Rajasthan have also imposed some special taxes.
E-Commerce industries have to pay Central taxes as well as state taxes for selling goods in various parts of the country.
The eradication of entry tax is directly proportionate to the selling price of the goods.The online sellers get discouraged by such type of goods entry taxes. Latest introduction of GST is, however, unclear regarding the e-commerce industry. There are also proposals from the industry to exempt this sector from GST.
All other cases about entry tax levied by different state governments are still under considerations. Hopefully, they will also be delivered in e-commerce industry’s favor. This will certainly make customers happy because the goods might be cheaper.