The proposed Goods and Services Tax
(GST) Bill, which is again testing waters at the Parliament for a possible sail-through,
will come as a bonanza for Indian logistics industry, which, according to Care
Ratings, will help the industry trim cost by 20 per cent with CAGR pacing at 15-20 per cent till 2020.
Though much-delayed, the GST roll out will facilitate uniform taxation structure and cheaper and faster delivery/movement
of goods across India, the report noted.
The one-nation-one-tax structure can
bring down the tax cost considerably for logistics sector which is primarily
classified into transportation, warehousing, freight forwarding and value-added
logistics, and truckers can avoid long
queues at entry points or check-points of inter or intra states and deliver
goods early at much lower operational cost.
The logistics cost can go down
drastically as operators can restructure and rationalize warehouses and
logistical infrastructure. Trucks remain idle for most part of the day at check
posts or entry points due to entry tax, Octroi, local body tax and other such hurdles,
which lead to loss of huge man-hour and fuel, the report pointed out.
The levying of GST on goods
transportation and availability of full credit on interstate transactions will
lower the logistic cost by 1.5-2 per cent of sales supported by go down
optimization and lower inventory cost.
A World Bank report has recently pointed
out that uniform taxation can save corporates up to 40 per cent of their
logistic expenses which are mostly incurred at toll plazas and check-posts.
“GST will create a positive environment
of uniform taxation system instead of the current cascading taxes faced by
traders through Central and State Tax Policies. The central GST, which is
proposed for inter-state movements of goods, will reduce enormous paper works
and complexities faced by finance people. They now have to only follow one
policy with astute transparency. For those moving cargo within the state, will
have to comply only with the state laws as for as taxation is concerned. This
will reduce the tax for traders who may pass on the benefit to the end customers,”
opines Bhaskar Venkatraman, the Founder and Director of JusTransact.com, the
e-commerce wing of Millennium India, which caters POS technology products to
logistics and other industries.
The transportation aids more than 60 per
cent growth of logistics sector followed by warehousing, which meets
agricultural and industrial storage at 25 per cent, while packaging and other
related businesses contributes the rest, he says.
Currently India follows double taxation
policy – central and state taxes, creating complex web of taxes on goods and
services with each state imposing taxes at various rates on goods that cross its
borders, leading to multiple taxation and complex calculation processes.
At present, the taxation rate goes up at
26.5% (Central VAT (Cenvat) of 14 per cent and State VAT of 12.5 per cent)
apart from 2 per cent state-level corporate tax for moving inter-state goods.
The proposed GST model, which includes
both central GST and state GST, proposes to convert around 29 Central and State
taxes and tariffs into a single tax at the point of sale (POS). According to the draft proposal, GST is
expected to bring down the combined Centre and State rates to 18-21 per cent
from the current 26.5 per cent.
GST will also eliminate the current practice
followed by companies to manage multiple warehouses at different states due to
the existing interstate taxation policy. Companies are forced to maintain
warehouses in each state and on an average each company maintains 20-30
warehouses in addition to have 20-30 carry & forwarding agents in each
state making the supply chain longer, complicated and inefficient.
About
JusTransact.com
Justransact.com is an e-commerce venture
of Millennium Retech Ventures India Pvt. Ltd promoted by Millennium Group.
JusTrasact.com was launched with a sole motive of providing reliable,
affordable and scalable POS solutions to the fast growing retail sector in
India. POS technology facilitates small, medium and large businesses automate
their activities, enhance customer experience and also make them competitive
with established players. The portal has made world-class cutting-edge POS
Hardware, Software and Knowledge accessible to retailers. Headquartered in
Chennai and having branches in major cities in India, Justransact.com offers
one-stop solution for all kinds of POS needs to both retail and non-retail
business applications. The portal currently sells 1000+ POS products of 15+
categories from 40+ world’s leading brands.
Media contact:
K Ramanathan
kr.iyar@gmail.com
Also published in:
Merinews.com
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