Is it a ‘Back Door Entry Tax’ ?

By- Harinder Salwan

The author is the CEO of Tricom Multimedia and is an expert in taxation. Views expressed are his own

Entry Tax is basically a back door entry that is being used by states to earn revenue from people who are importing from outside the state, into their state where they are residing and is nothing but a tax which is an old tax with a new name viz. Octroi which is currently left only in some places which implies that those places putting this tax viz Entry Tax are trying to create barriers of free trade.

Indian states which have their own boundaries within the country have started moving to introduction of Entry Tax to corner revenue on the tax front which they are not able to control due to the increase in the online market which has actually expanded the state boundaries to the boundaries of the state and made it easy to sell directly anywhere into the country from a single location.

We have been cribbing and blaming the political parties of having vested interests of states in the front and delaying the implementation of Goods Service Tax (GST) but even post implementation when we are saying that all various taxes would be merged into a single tax but the reality is much different as the current structure that is being discussed is again similar to what we are living today – VAT for State and CST for interstate and the proposed GST also has these two very much in place and similar but with a rhyming name – CGST and SGCT where the first C stands for Central and the second S stand for State.

In the proposed structure of GST we are claiming that we will get rid of all other taxes which look very much difficult due to the constitutional structure as the Central Government has no control to rein in the states to follow the taxes uniformly across the country.  Even before we have the GST implemented by the Government each state is squabbling about protecting their interests and quite a few items would be out of the preview of the GST framework.

An ideal GST would be something which removes all state barriers and considers the whole country as a single unit and any individual is free to move across the nation and he can buy the same commodity anywhere at the same price and quality which is currently a dream for an Indian nation and the staring example for everyone to see is the cost of fuel for vehicles and fuel for liver which varies as much as 20 % across the country and even between the metro cities.

So when we say is Entry Tax a good barrier well my reply would be a big NO as we are creating barriers which need to go and then can the dream of some leaders who are working for the ease of doing business will be able to turn their dreams into reality and the individual will be able to move across the country and the country can bloom into an great economy only then.