The state government has asked top e-tailers to charge the difference in value added tax (VAT) rates between Gujarat and the state from where a product is supplied as entry tax. Similar mechanism would apply to locally made goods, which are sold in other states.
The new levy was introduced in this year’s state budget to provide level playing field to local dealers who claim to be at the receiving end of the competition.
“Suppose Maharashtra charges 5% VAT on mobile phones and Gujarat has 15% VAT, the difference works out to be 10%.
If a consumer in Gujarat buys a mobile phone sold by a dealer in Maharashtra, he or she will be charged differential 10% as entry tax,” explained a senior government official.
As a result, now buyers will not get low cost goods online. However, state’s retailers will now have less competition with e-tailers.