Madhya Pradesh is the latest state to impose a 6% entry tax on goods bought via ecommerce marketplaces, reports ANI. It's worth noting that in February, the state government had announced plans to introduce such a tax as a part of its budget plans that month. Jayant Malaiya, finance minister for the state, said the this was done as a response to the "losses incurred due to proliferation of etailers such as Flipkart and Amazon". Madhya Pradesh has now joined seven other states - Uttar Pradesh, Assam, Odisha, Uttarakhand, Rajasthan, West Bengal, and Mizoram - which imposed the tax citing loss of revenues. Earlier in the month, Amazon challenged the ecommerce tax in Gujarat and filed a case in the high court against the state and the commissioner of tax. Flipkart has sued the Uttarakhand and Gujarat government over the entry taxes into the respective states. For the ecommerce marketplace, which is a facilitator and an intermediary, this tax, if applicable, should be imposed on the merchant directly, and not on the marketplace. However, given the millions of transactions taking place via ecommerce marketplaces, states find it easier to tax the marketplace or delivery entity instead of the seller. To address this, states are resorting to taxing the ecommerce marketplace, which is technically only an intermediary. We expect more and more states to take cue from this, and start imposing the ecommerce tax. The right approach to taxes Earlier in September, the Delhi government made it mandatory for all ecommerce companies and platforms to file…
