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After nearly two decades, the West Bengal Government has proposed reintroduction of “entry tax”, on goods. The West Bengal Tax on Entry of Goods into Local Areas Bill, 2012 was passed in the West Bengal Legislative Assembly here on Friday.
According to the Bill, the tax may be imposed on movement of goods entering West Bengal from other States as well as movement of goods within the State.
If notified to the fullest extent (i.e even on movement of goods between Gram Panchayats or Municipalities, the entry tax will actually add to the 4 per cent base rate of VAT.
A source in Government, however, expects that the “Entry Tax” may initially be imposed only on goods entering the State.
The tax will be levied on all dealers, importers and on “any specified goods into a local area, or on the quantity or weight of any specified goods”.
But it will, however, not be imposed on goods brought in the State for immediate export to destinations outside India.
In the absence of any specific declaration by the dealer, it will be presumed that “goods entering into local area are for consumption, use or sale”.
Tax Collection
While the Bill proposes a tax “not exceeding 5 per cent”, the Finance Minister, Mr Amit Mitra, while tabling the Bill in the Assembly said that tax will not exceed 1 per cent.
Every dealer has the option of self-assessment.
According to the proposals in the Bill, the tax will be collected through the VAT collection system online.
However, default and failure to submit returns appropriately will draw penalties that vary from imposing a fine of at least 50 per cent of the tax due to imprisonment in case of fraudulent declarations.
Development Fund
The Bill further calls for the setting up of a “compensatory fund” from the tax collections.
The compensatory fund will be set up for local area development, that include setting up roads and allied infrastructure such as sub-ways and bridges, linking markets and providing grants and subsidies to local bodies and State Government agencies.
According to the finance minister, the State Government will ensure that the proceeds of tax collected under this Act “are not much more than the amount required for development of local areas for facilitating trade, commerce and industry.”
Confusion
While the Bill remains silent on the impact of increase in price, Opposition members have argued that it will push up price of goods.
The Chief Minister, Ms Mamata Banerjee, has however, assured that levy of entry tax would neither affect the common man and nor lead to an increase in price of essentials.
Opposition MLAs further pointed out that the Bill, does not specify the taxable goods or goods that are exempt from such tax.
The amount of tax that the State Government plans to collect has also not been spelt out in the Bill.
Earlier, industry bodies in the State had expressed their concern over a possible increase in price after re-introduction of entry tax.
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