States have levy to impose entry tax, says Supreme court

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New Delhi : In a huge jolt to companies, the Supreme Court on Friday upheld the rights of states to levy entry tax. The top court also said states have are well within their rights to reduce tax burden.

The judgement came on pela by corporate houses challenging the imposition of entry tax by state governments. The plea says the entry tax violates their constitutional right to carry out free trade and commerce.

Entry tax is levied on movement of goods from one state to another and is charged by the recipient state to protect its tax base.

The plea by corporate houses claim that Entry Tax breaches Article 301 of the Constitution, which provides for freedom of trade and commerce within the country.

About Rs 30,000 crore is collected by states every year by way of entry tax. States such as Odisha earn around Rs 16,000 crore. Similarly, the Municipal Corporation of Greater Mumbai collects around Rs 7,500 crore annually through octroi levy - another form of entry tax.