Though the state Excise and Taxation Department has proposed a 5 per cent entry tax on online sales and also finalised rules for levy of tax, it may take some time as the Cabinet has to take a final call.

“We have proposed 5 per cent entry tax on online sales in a single slab and also finalised the rules but the final decision will be taken by the Cabinet,” Tarun Kapoor, Principal Secretary, Excise and Taxation, said.

The Assembly had passed the HP Tax on Entry of Goods (Amendment) Bill 2016 during the Budget session in April 2016 providing for imposition of entry tax on all online purchases to provide a level-playing field to local businessmen and also plug the leakage of revenue through online sales.

However, the tax has not been imposed and there is resentment among local dealers as their sale was hit during the festival season due to large-scale online purchases by consumers. Although, the tax will be paid by courier companies, ultimately the burden will fall on consumers.

Local shopkeepers felt that the tax would act as a deterrent and their sale might get a boost, but were apprehensive as the discount offered by online sites could not be matched.

“We are paying for the employees’ salaries, rent, electricity and other bills and, therefore, cannot match the discounts offered by online sites,” said Rajan Sood, a local businessman.

The flourishing online sales had put manufacturers and big companies in an advantageous position over retailers as online sales were free from tax and the state government was also suffering a revenue loss of about Rs 250 crore annually, sources in the Excise and Taxation Department said.

“The tax will be imposed on entry of goods specified in schedule II made through online purchase or transactions or through e-commerce, on the basis of value of goods in the manner prescribed and will be collected from person incharge of the goods on behalf of the importer,” sources said.

Entry tax on online sales would add to tax revenue of the state government as presently, online transactions, whether through credit or debit cards or cash on delivery, were totally tax free and neither value-added tax (VAT) or entry tax had been imposed by the state on these goods, they said.