Himachal Pradesh government has started backing down on the issue of entry tax.

The Himachal Pradesh government has started taking a step back on the issue of entry tax. First, at the end of March, it made some cuts in the revised entry tax rates. Now, by issuing a new notification on Friday, the same tax rates have been further reduced. The state government has taken this step in view of the ongoing agitation at the border posts connected to Punjab. It is noteworthy that Chief Minister Sukhwinder Singh Sukhu, while presenting the budget for the financial year 2026-27 in the state assembly on March 21, had presented some such proposals to improve the state's shaky financial system, which are going to put a burden on the pockets of the people. These included an increase in entry tax rates.

He had hoped that the state government would collect an additional revenue of Rs 171.48 crore through the increase in entry tax rates. The new rates were to be implemented from April 1. The budget proposal had imposed an entry tax of Rs 100 on non-Himalayan mini trucks, tempos and three-wheelers while the tax on 5-seater cars and other private vehicles was increased from Rs 70 to Rs 170. Similarly, the tax on 6-12 seater vehicles was increased from Rs 100 to Rs 130. The new tax rate for commercial vehicles and non-Himalayan buses was Rs 600 while the tax for trucks or commercial vehicles with more than 6 tyres was increased from Rs 600 to Rs 900. 

It was natural to raise voices against such an increase; especially considering that the people of Punjab would be the most affected by it. In view of the threat of a movement by Punjab vehicle owners, Mr. Sukhu clarified on April 1 that a monthly entry pass of Rs. 100 would be issued to small vehicles belonging to residents of areas beyond the five-kilometer border with Punjab and Haryana and that other increased rates would be reviewed. He later announced some reduction in the entry tax rates, but this step failed to pacify the agitators.

Political parties of Punjab have also joined the fray against the new rates. Chief Minister Bhagwant Mann warned that if the Himachal government does not rationalize the entry tax rates, Punjab will also start collecting entry tax from vehicles with Himachal number plates. Punjab Congress leaders also insisted on reviewing the tax rates, seeing the Congress government of the neighboring state in a bind. Due to the pressure of all these activities, the Himachal Chief Minister considered it appropriate to bow down. Although the increased rates have not been completely withdrawn, the complete exemption of mini trucks and other small vehicles from entry tax, as well as the reduction of the entry fee for five-seater cars from Rs 170 to Rs 100 and for 6 to 12 seaters from Rs 130 to Rs 100, is the result of the above pressure. Due to these steps, the chances of the blockade of Himachal Pradesh from the Punjab side have increased.

There is no doubt that Himachal Pradesh is going through a serious economic crisis. The havoc wreaked by the monsoon in 2023 and again in 2025 has derailed the state's economy. Most of the state government's financial resources have been focused on repairing damaged infrastructure and providing relief and rehabilitation to disaster victims. With the Congress government in the state, the Modi government at the Centre has also been reluctant to provide central assistance. The extent of the financial crisis can be gauged from the cut of Rs 3586 crore in the new year's budget compared to the previous financial year.

The budget of the last financial year was more than Rs 58,000 crore. The new budget is Rs 54,928,000 crore. In such a situation, it cannot be said to be a wrong step by the state government to generate new financial resources or make the old ones more effective. Despite such circumstances, the sudden and substantial increase in the entry tax rates was not justified. Due to this, the Sukhu government had to face strong public opposition from both sides of the Himachal-Punjab border. Due to geographical structure, the economy of Himachal is directly linked to Punjab and Haryana. Therefore, the three governments should take decisions that directly affect the people of the three states with great caution. By not doing so, the Sukhu government lost its prestige and also gained infamy.