Octroi Tax

Subject – Economy

Context – Before value added tax and other centralised taxation systems, one of the major earnings of cities used to be from octroi.

Concept –

Octroi duty is the tax levied by local or state governments on certain categories of goods as they enter the area. It is a charge for allowing transit of good through the jurisdiction.
Just as customs duty ensures that goods for other countries are taxed, octroi is meant to ensure that goods crossing state borders within India are taxed appropriately.
As of 1 July 2017, with the introduction of GST country-wide, the octroi has been abolished.