Octroi and Entry tax - overview

This functionality is specific for India.

Octroi and Entry tax are indirect local taxes levied by the tax authorities when goods enter their jurisdiction. Octroi is levied when the goods enter a city, whereas Entry tax is levied when the goods enter a state. The supplier pays the tax to the local tax authorities.

You cannot reclaim Octroi and Entry tax from the tax authorities. For sales, you can charge the tax to your customers. For purchases, you must book the Octroi or Entry as costs on the inventory.

Octroi and Entry tax must be calculated on the invoice amount including the CST, VAT, or LST amount. The Octroi or Entry tax amounts must be reported separately in various tax analysis reports.

To handle Octroi and Entry tax

You can handle Octroi and Entry tax in one of the following ways:

  • Manually
    If Octroi and Entry tax are levied rarely, you can manually calculate the tax amount and book it as costs on the sales or the purchase transaction .
  • You can set up tax codes for each state and city in which you must pay Octroi or Entry tax. In this way, LN displays a default tax code and tax amount for order lines to which Octroi or Entry tax applies. For details, refer to To set up Octroi and Entry tax.
Note

Octroi and Entry tax can also apply to transfer of goods between your own warehouses. If the warehouses reside in different states or in different cities, you must set up an invoiced goods relationship between the warehouses because,you require an invoice to calculate the tax amounts.

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