Why eCommerce Sellers should know about Entry Tax / Octroi Charges ?

Since our State Governments has to ensure the overall development of the State, they are supposed to levy taxes on the Customers, Traders and Sellers.

Among various Taxes, Entry Tax and Octroi are commonly levied taxes on the goods moving from one state to other. Some state government levy Local Body Tax(LBT) called as OCTROI when your products enters the state. These charges are applicable in Mumbai specifically and the charges fluctuate as per the government regulations. Generally the Octroi varies from 3% to 9% of the invoice value of the product.
The Octroi charge is payable by the recipient at the time of delivery or at the nearby check post. The courier company will collect the Octroi amount from the recipient at the time of delivery.
Bigger companies in the industry like Flipkart, Amazon typically absorb these charges and pay the courier companies directly to avoid delays in the shipment. Smaller companies / Individual eCommerce Sellers don't typically have this advantage as courier companies are not willing to pay Octroi / Entry taxes on Sender's behalf. Hence this is quick guide to demystify the charges.

The Problem With Entry Tax And Octroi
What is Octroi taxes ? 

The problem with entry tax and Octroi is that there is no fixed amount charged at state entry points sometimes.
Yes, there is a percentage of amount which every state should charge (like 1% to 15% ) as per their own laws, but on the ground, they charge as per regulations. Sometimes they don’t charge at all.
The exact amount  of Octroi Charges will be known only After the Parcel enters the State, and not when the customer placed the order.

What is the difference between Octroi and Entry tax?
Difference between Octroi and Entry Tax
Entry tax and Octroi both are indirect tax. Power to levy entry tax is with states whereas power to levy Octroi is with local municipalities. Both are levied on entry of goods into local area of respective state or municipalities. Two different municipalities of the same state can levy Octroi but entry tax is levied only once when goods are entered from one state to other.
What is the Percentage of Entry Tax, Octroi Applicable and What are the TaxForms Required:
Tabular data of Entry tax, Octroi charges  and Tax form applicable for particular states


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