Entry Tax has been imposed on E-Commerce Companies, Online Market Place and sale of Goods through Electronic Media on goods sold within Rajasthan from outside the state of Rajasthan without payment of VAT in the State of Rajasthan. As per government clarification this has been done to protect the interest of revenue in Rajasthan. We are noting below FAQs in respect of the new law within Rajasthan:-
FAQ 1 : Under which Law, Section and Notification, the Government of Rajasthan has imposed Entry Tax on sale of goods through Electronic Media?
Reply : The Government of Rajasthan has inserted Sub-Section (1A) in Section 4 (i.e. Incidence of Tax) of The Rajasthan Tax on Entry of Goods into Local Area Act, 1999 to cover the Sale of Goods through Electronic Media within the Ambit of Entry Tax. The draft section is noted below:-
“(1A) Every person who, in the course of business, whether on his own account or on account of a principal or any other person, brings or causes to be brought into a local area, or takes delivery or is entitled to take delivery into a local area of, any goods in pursuance of sale or purchase effected through electronic media shall be liable to pay tax on the taxable purchase value of the goods.”
RATE OF TAX
Further, the Government has vide Notification No. 12(61)FD/Tax/2014-Pt-I-25 dated 16/06/2016 has inserted S. No. 48 to cover all goods included in Schedule III, IV, V and VI of the Rajasthan VAT Act, 2003 in addition to the Goods mentioned at S. No. 1 to 47 of the Notification No. F.12(23)FD/Tax/2015-211 dated 09/03/2015 within the Ambit of Entry Tax in Rajasthan. The entry is noted below for ready reference:-
| 48 | Goods not covered by entries number 1 to 47 of this list but included in Schedules III, IV, V and VI of the Rajasthan Value Added Tax Act, 2003 (Act No. 4 of 2003) | 5.50 |
EXEMPTION
Further, the Government has vide Notification No. 12(61)FD/Tax/2014-Pt-I-26 dated 16/06/2016 has granted exemption from payment of Tax payable under the said Act on entry of Goods specified at Serial No. 48 of List given in Notification No. F.12(23)FD/Tax/2015-211 dated 09/03/2015 as amended from time to time, on following conditions:-
(i) If such goods are brought ot cause to be brought into the local area, or delivered or cause to be delivered into local area, other than in pursuance of sale or purchase effected through electronic media, for consumption, use or sale therein; or
(ii) If such goods are brought or cause to be brought into local area, or delivered or cause to be delivered into local area, in pursuance of sale or purchase effected through electronic media, for consumption, use or sale therein and tax leviable under the Rajasthan Value Added Tax Act, 2003 (Act No. 4 of 2003) in respect of such goods has been paid in the state.
FAQ 2 : What is the date from which Entry Tax is applicable on Sale of Goods through Electronic Media within the state of Rajasthan?
Reply : The applicable date’s are as below:-
| (A) | For Goods mentioned at S. No. 1 to 47 of the Notification No. F.12(23)FD/Tax/2015-211 dated 09/03/2015 | 09/04/2016 |
| (B) | For Goods not covered by entries number 1 to 47 of this list but included in Schedules III, IV, V and VI of the Rajasthan Value Added Tax Act, 2003 (Act No. 4 of 2003) | 17/06/2016 |
FAQ 3 : What is the Rate of Entry Tax on Sale of Goods through Electronic Media?
Reply
| (A) | For Goods mentioned at S. No. 1 to 47 of the Notification No. F.12(23)FD/Tax/2015-211 dated 09/03/2015 | As prescribed in the said Notification varying from 0.25% to 65% : Enclosed as Annexure I |
| (B) | For Goods not covered by entries number 1 to 47 of this list but included in Schedules III, IV, V and VI of the Rajasthan Value Added Tax Act, 2003 (Act No. 4 of 2003) | 5.50% |
FAQ 4 : What is the due date for Payment of Entry Tax in Rajasthan and what is the Interest Liability in case of Delay in Payment of Entry Tax?
Reply : Entry Tax liability for a month has to be paid on or before 14th of the next month. In case if there is any delay in payment of Tax, Interest has to be paid @ 12% p.a. for the number of days delay.
FAQ 5 : Who is liable to pay Entry Tax on Goods brought into Local Area from Outside the State through Electronic Media?
Reply : A plain reading of the Sub-Section (1A) of Section 4 (i.e. Incidence of Tax) of The Rajasthan Tax on Entry of Goods into Local Area Act, 1999, it appears that the Liability for payment of Entry Tax in case of sale and purchase of goods through electronic media is casted on the Transporter of the Goods.
However, as per our discussion with the officials in the Commercial Taxes Department, contradictory views have been given including views that the incidence of liability for payment (discharge) of Entry Tax is on the Online Sales Platforms on which the sale and purchase of transaction is taking place.
Our View:-
In our view the law is yet to be settled in this case and since the quantum of liability involved is very high, a dealer must obtain clarification on this issue from the Commercial Taxes Department before payment of Tax. We have also represented the department in this matter.
FAQ 6 : Whether the liability for payment of Tax is on Gross Value of Goods or Net Value of Goods (i.e. Total Value of Goods brought in Rajasthan Less Goods returned back to the Seller i.e. Sales Return)?
Reply : Rule 12 of The Rajasthan Tax on Entry of Goods into Local Area Rules, 1999 deals with Exemptions and Deductions from Purchase price liable to Entry Tax. The provisions of Rule 12 are noted below for ready reference:-
“12. Exemption and deduction.—
(1) In determining the purchase price liable to tax, the amount relating to the purchases made within the local area from a registered dealer doing business in the same local area shall be deducted.
(2) All amounts received from the seller in respect of the goods returned to them by the dealer shall be deducted from the purchase price liable to tax provided that the goods were returned within a period of six months from the date of delivery of the goods.
(3) In determining the value of goods liable to tax, the value of goods purchased or received from outside the local area but subsequently sent out of the local area otherwise than by way of sale shall be deducted, provided that the goods are sent out of the local area within a period of six months from the date of entry of such goods into the local area and entries are made in the stock register in the manner specified in sub-rule (5) of rule 14.”
Our View:-
Sub Rule 2 of Rule 12 clarifies that sum received from a seller on return of goods is deductible from the Taxable Value of Purchase, further a time limit of 6 months from the date of delivery has also been prescribed hence in our view the liability for Payment of Entry Tax is on Net Value of Goods (i.e. Total Value of Goods brought in Rajasthan Less Goods returned back to the Seller i.e. Sales Return).
FAQ 7 : Is there any exemption under Entry Tax, if the tax leviable under RVAT has been paid on the goods in the state of Rajasthan?
Reply : Please refer para (ii) of the EXEMPTION section to our Reply on FAQ 1 above, where the government has specifically granted exemption from Entry Tax in respect of good on which VAT leviable under the Rajasthan VAT Act, 2003 has been paid.
FAQ 8 : What are the Legal Compliances to be done by an e-commerce company, online market place and transporter of goods who is engaged in the transaction for sale through Electronic Media?
- Registration under Entry Tax
- Registration for Submission of Monthly Information in EL-1 and EL-2
- Monthly payment of Entry Tax
- Monthly submission of the Information in the Form EL-1 and EL-2 [Format Enclosed]
- Quarterly Filling of Return
ANNEXURE – I : ENTRY TAX RATE IN RAJASTHAN
(S. No. 1 to 47 – S. No. 48 has been covered in FAQ 1)
| S. No. | Description of Goods | Rate of Tax (%) |
| 1 | 2 | 3 |
| 1 | Sugar | 0.25 |
| 2 | Stainless steel ingots, billets, blooms, flats and flat bars | 0.5 |
| 3 | 1[All kinds of yarn, other than cotton & silk yarn in hank.] | 2 |
| 4 | All kinds of fuels including petrol, gasonline, high speed diesel oil, light speed Diesel oil, superior kerosene oil, LPG (including propene, butylenes, butadiene, ethylene, oxylene), ATF (Aviation turbine fuel), furnace oil, hexane(solvent oil) Naphtha, Natural gas, petroleum jelly(including Vaseline) paraffin wax (including chlorinated paraffin wax), LSHS (low sulpher high stocks), CBFS (carbon black feed stock), petroleum coke in any form, Heavy alkylate, Remax, Revive, C-9 known by whatever name. | 3 |
| 5 | Oilseed (excluding Til) for oil extraction /refining and crude/ degum oil for refining | 3 |
| 6 | ACSR conductors [Entry deleted by S.No.3568 dated 08.03.2016 with immediate effect] | 4 |
| 7 | All kinds of electrical and electric goods including electronic meters, FAX Machines, SIM Cards, Smart Cards and parts and accessories thereof, but excluding radio sets and radio gramophones, V.C.R., taperecorders, transistor sets and parts and accessories thereof. | 4 |
| 8 | All kinds of telephone and parts thereof. [Entry deleted by S.No.3568 date 08.03.2016 with immediate effect] | 4 |
| 9 | Aluminum structurals, steel fabrication items including G.S. stay Sets, switch fuse units and isolators. | 4 |
| 10 | Bitumen of all kinds | 4 |
| 11 | Computers and their accessories. | 4 |
| 12 | Generating sets | 4 |
| 13 | Glass and glass sheets | 4 |
| 14 | Insulators [Entry deleted by S.No.3568 dated 08.03.2016 with immediate | 4 |
| 15 | Lubricants including Lube oil and grease | 4 |
| 16 | Parts and accessories of all types of motor vehicles (other than tractors) including two and three wheelers | 4 |
| 17 | Photocopiers [Entry deleted by S.No.3568 dated 08.03.2016 with immediate effect] | 4 |
| 18 | Stay wire [Entry deleted by S.No.3568 dated 08.03.2016 with immediate effect] | 4 |
| 19 | Steel structurals and steel bars including Thermomechanically Treated steel bars(TMT) | 4 |
| 20 | Television sets, washing machine, microwave oven [Entry deleted by S.No.3568 dated 08.03.2016 with immediate effect] | 4 |
| 21 | Transformers and transformer oil | 4 |
| 22 | Types, tubes and flaps of two wheeler and four wheeler motor vehicles, motor vehicles, motor vehicles with more than four wheels or jeep trailers. | 4 |
| 23 | All kinds of non-alcoholic drink and beverages | 5 |
| 24 | All kinds of paper and paper products including exercise books but excluding handmade paper | 5 |
| 25 | 2[Automated Teller Machine(ATM), Cash Deposit Machine (CDM) Automatic Ticket vending Machine(ATVM) ] | 5 |
| 26 | Dyes and dyestuffs , textile auxiliaries including chemicals used in textile processing and starch | 5 |
| 27 | Earth moving and mining machinery including hydraulic excavator, hydraulic dumper, tipper, heavy loader, backhoe loader, wheel loading shovel, wheel excavator, traked exacavator, compactor, mobile crane , road roller, dozer, grader, skid steer and parts thereof | 5 |
| 28 | HDPE bags, plastic bags & sacks , plastic laminated pouches | 5 |
| 29 | Liquefied Natural Gas(LNG) | 5 |
| 30 | Non-woven fabrics, textile fabrics impregnated, coated, covered or laminated with plastic, PVC leather cloth and synthetic leather | 5 |
| 31 | Optical fiber cables and Polythylene Insulated jelly Filled | 5 |
| 32 | PP/HDPE woven fabrics | 5 |
| 33 | Tin containers [Entry deleted by S.No.3568 dated 08.03.2016 with immediate effect] | 5 |
| 34 | X-ray apparatus and equipments, medical imaging, diagnostic and therapeutic equipments | 5 |
| 35 | All kinds of firearms including parts and accessories thereof | 14 |
| 36 | All type of sanitary goods and fittings | 14 |
| 37 | Cement | 14 |
| 38 | Ceramic and glazed tiles | 14 |
| 39 | Lifts and elevators | 14 |
| 40 | Weigh bridge | 14 |
| 41 | Aerated water [Entry deleted by S.No.3568 dated 08.03.2016 with immediate effect] | 15 |
| 42 | Air Conditioner and Refrigerator | 15 |
| 43 | Mineral water and water sold in sealed containers [Entry deleted by S.No.3568 dated 08.03.2016 with immediate effect] | 15 |
| 44 | Opium (other than lanced poppy head ) | 50 |
| 45 | Pan Masala (not zarda mixed) | 65 |
| 46 | Tobacco, cigarette, cheroots, cigars and cigarillos, zarda mixed pan masala including gutkha and churi | 65 |
| 3[47 | ACSR conductors | 4] |
- Subs. by S.No.3568 dated 08.032016 w.e.f .08.03.2016 for “Polyester Filament Yarn” yarn example with condition by noti S.No.3588dated 30.03.2016
- Subs. by S.No.3568 dated 08.03.2016 w.e.f. 08.03.2016 for “Automated Teller Machine (ATM).
- Added. by S.No.3568 dated 30.03.2016 w.e.f.01.04.2016.