Offline Vendors Cry Foul; Ask Government to Introduce Entry Tax for Online Goods

A group of MSME merchants in Chennai have asked the Government to introduce entry tax for online goods. They allege that online sellers are exploiting VAT.

The tug of war between online and offline sellers has intensified. A group of MSME merchants in Chennai have demanded that the Government introduce an entry tax for online goods, said a report.

The meet was held by the Confederation of I.T Associations that represents over 1,500 computer hardware and gadget vendors. They threatened a boycott of all larger vendors who allowed the discounting to take place.


The association also asked the Government of Tamil Nadu to explore possible exploitation of VAT by the e-commerce companies. The MSME merchants alleged that online sellers moved goods to take advantage of lower VAT in certain states, said The Hindu.

They demanded that the Commissioner of Commercial Taxes introduce an “entry tax” for online goods.

“If the discount margin is five per cent or so, I can impress upon my customers to pay me extra because I am physically present to address any service request,” Muthiah, president of the Confederation said“But sometimes the discount margins are huge, anything between 25 to even 50 per cent. This raises questions about the legitimacy of pricing offered by the stores. This scenario is not good,” he said.


The trouble for online companies has been mounting ever since electronic majors accused them of offering heavy discounts on products sold online.

Lenovo and Toshiba had issued warnings against online buying from particular sites. Canon India released a list of authorised dealers and certificates authorising certain dealers selling Canon printers.

The Cyber Police of Bangalore too had issued an SMS message that warned customers from buying online.

The demand for an “entry tax” is one of the first demands made directly by the offline vendors to the Government.

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