Have you found the perfect house or office space in a new city or state and want to relocate? For relocation, you must be looking for professional packers and movers in Bangalore, Delhi, Pune, etc.

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The packers and movers service providers in India used to charge octroi duty for shifting goods in and out of states that set this tax. Although octroi is not in force, you must inquire about the GST tariff before hiring any packers and movers.

What are Octroi Charges?

An octroi charge is an amount you must pay when you cross city or state borders. The state government charges this tax on certain goods for sale or personal use. The percentage of octroi is not fixed as it varies from one state or city to another. It is levied based on the total number of goods, value, and weight. Octroi was not charged in all parts of India except in the states of Gujarat and Maharashtra. So, when you hire packers and movers in India for home relocation in Mumbai or Ahmedabad, the shifting service providers may charge an octroi based on the number of your goods and other cost-affecting factors for relocation.

The Octroi Levied States in India

There were two states in India, Gujarat, and Maharashtra, which levied octroi charges. The octroi charges in Mumbai, Maharashtra, were abolished first in 2013 and were replaced by a new tax called Local Body Tax. However, the state re-established the octroi charge due to a decrease in the Local Body Tax. As of July 1st, 2017, the octroi is abolished across India, introducing the Goods and Services Tax.

History of Octroi

Octroi has a long history in India and various other countries. People in Italy first used octroi, called portorium or vectigal. It was also charged in France in the Roman era during the pre-revolution period, which was one of the reasons for the French Revolution. There was an agitation in the country to abolish the octroi tax from time to time. The tax was finally removed in the country in 1948. In India, it was a duty levied on imported goods at port towns and was a source of income for local governments. There are numerous references to the octroi tax in the Arthshastra, an ancient Indian Sanskrit treatise written by Kautilya on political science, military strategy, and economic policy.

How to Calculate Octroi Charges?

One must note that the octroi charges are not fixed and differ from one state or city to another. The Municipal Corporation of the state or city usually formulated a list of goods on which the octroi tax is levied. The moving company may charge you octroi to shift your belongings when you hire packers and movers in Hyderabad, Chennai, Mumbai, or any other city. It is also best to list the goods you want to relocate so the moving company will provide you with the correct cost of moving.

List of Octroi Levied Goods

Given below is the list of goods on which the state government charges octroi:

  • Gold items
  • Silver items
  • Products made from wood
  • Food grains
  • Imported glass
  • China products
  • Silk products
  • Domesticated animals
  • Cars and other vehicles
  • Leather goods

Octroi Charges in India

The state government in India charges around 3 to 5% octroi for the list of goods formulated by the Municipal Corporation for entry into a state. The octroi charges in India have kept fluctuating and increasing based on several factors.

Where is Octroi Charged?

When the transport vehicle reaches a state border, a supervisor will inspect the goods and, based on that, give the total amount of tax they have to pay. The packing and moving company will pay this octroi tax at the time of transport, which you can return when you pay the final relocation amount to the company. You can ask your shifting service providers to adjust the tax charges in the total shifting cost.

Is Octroi Still Levied in India?

Octroi was levied in two states which are Maharashtra and Gujarat. However, the state government removed octroi and introduced a new tax, known as the Local Body Tax. But, octroi had to be re-established as there was a significant decrease in the revenues due to Local Body Tax. Presently, octroi has been abolished in the entire country since the introduction of Goods Tax and Services or GST on July 1st, 2017, with the primary objective of the Central Government of India to unify the goods and services tax in pan India. GST has subsumed all the indirect taxes.

Why is GST Chosen over Octroi Charges?

Various states were charging octroi as per their local laws. Due to this, there was no uniformity in this taxation. Sometimes, one has to pay for taking goods out from one state and bringing the same items into another state. This used to cost more for similar goods in other states where octroi was not charged. When the government introduced GST with the view of one country, one tax, then octroi rules lost their significance. Given below are the advantages of GST over octroi:

  • GST has brought together all the indirect taxes under one roof.
  • GST will reduce the cost of logistics by removing the border taxes.
  • It helps bring regulation and accountability to unorganized sectors.
  • It is believed that establishing GST will reduce the cost of products and services in the following years.
  • The tax collected under GST will be distributed evenly across India to develop underdeveloped or developing regions by providing funds.

Frequently Asked Questions (FAQs)

Q.1 What is entry tax and octroi?

The authorities impose entry and octroi taxes when goods enter their jurisdiction. Octroi is charged when goods enter a city, and entry tax is levied with goods entering a state border.

Q.2 What is the difference between octroi and custom duty?

The state charges transporters with octroi for goods delivery from one state to another. Custom duty tax is imposed on the export and import of goods.

Q.3 Is octroi still levied in India?

No, as of July 1st, 2017, the octroi tax has been replaced by the Goods and Services Tax by the Indian government to have uniformity in taxation.

Q.4 Is entry tax abolished after GST?

Yes. The government abolished entry tax and replaced it with GST.

Q.5 Who abolished the octroi tax?

The state assembly passed the GST bill to replace octroi duty. It has been replaced by GST it in July 2017.

Pratiksha Priya
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