Early Signs That GST Bodes Well For Logistics

19 july,2017

• Ruck drivers used to wait for hours at various checkpoints to pay state taxes on cargo. They waited as 100s of items were checked and the tax calculated at numerous tax points on the way.
• Delays, tax fees and widespread bribes drove up costs and added to inefficiency.
• Some say that GST might eventually add early 1% point to GDP growth.
• It has many toothing problems and pains:
  • Not enough time to prepare
  • Not understand which tax rate to pay
  • Not know how to file invoice
  • Not have stable internet connections

• Textile industry, 2^nd largest employer after agriculture nt able to adjust.
• 1^st test comes on sept 5 when businesses are required to file their 1^st tax returns. It will also be clear if govt. tax portal is ready for the uploads.
• Almost 7 million of the 8 million VAT and Service tax payers under the old system have registered for GST, and more than 5,60,000 businesses have signed up to pay tax for the first time. Govt. says that many more will register for the benefit of tax credit system and threat of penalties.
• Logistics shows how india’s biggest problems ( corruption and bureaucracy ) is alleviated.
• The industry contributes to 13% of gdp but is still underdeveloped, fragmented and fraught with ineffeciencies.
• Before gst, 11 days for container to travel from shanghai to Mumbai but almost double to get from Mumbai to delhi according to world bank. Upto quarter of journey time is spent at checkpoints.
• Eleminating these, logistics cost could fall by 20%
• Trucking companies say that shipping orders are less as companies are getting used to gst, the elimination of border tax posts in most indian states has expedited(make smthing happen quickly) the movement of goos and cut fuel and labour costs.
• Economic growth may be lifted by reduced transportation times and increased compliance that will boost revenue for the govt. that could be spent on infrastructure, sanitaton and education.
• Before gst, some companies had multiple warehousing in different states because they didn’t want to move goods from1 state to another
• Patel Intergrated Logistics, Mumbai base logistics company, said that he expected tax revamp to save his company up to the equivalent of $6,20,000 annually and yield a 25% increase in profit.
• Antique Stock Broking Ltd., Mumbai based financial service company, estimated that drivers will save upto $115 in bibes on each trip in checkpoint graft.
• However, groups of officials known as ‘flying squads’, who carry out spot checks to examine paperwork.still demand payments, said NAVIN GUPTA, secretary general of industry lobby of All India Motor Transport Congress. “physically the check post barrier has been removed but the flying squads are still there.”