The Shivraj Singh Chouhan-led Madhya Pradesh government on Wednesday decided to levy six per cent entry tax on goods ordered online from outside the state.

Amid protests by traders and business houses who directly sell goods, state finance minister Jayant Malaiya made the announced about the tax levy while presenting the budget for 2016-17.

Representative image

With smartphones making inroads into the lives of the people in Madhya Pradesh, the craze for online shopping has surged like anything. Sources claim that buyers, mostly youngsters, make 25 per cent purchases online.

For some time, the traders were losing out to e-commerce companies and the state government was too facing revenue shortfall due to an untaxed online transaction, so it was decided to levy tax on such transactions.

The state government would earn fresh revenues due to the levy of taxes while traders involved in direct selling could also gain as buyers could return to offline shopping once the e-commerce companies shift the tax burden on them.

Meanwhile, states like Uttar Pradesh, Bihar, Uttarakhand and West Bengal already have taxed e-commerce companies.