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Revenue department plans linking e-way bill with FASTag, logistics data bank to check GST evasion

Revenue department plans linking e-way bill with FASTag, logistics data bank to check GST evasion

The revenue department is planning to integrate e-way bill with NHAI’s FASTag mechanism and DMICDC’s Logistics Data Bank (LDB) services, to facilitate faster movement of goods and check GST evasion.

The proposal, according to officials, will improve operational efficiencies across the country’s logistics landscape.

Currently, lack of harmonization under the ‘track and trace’ mechanism in terms of sharing information among different agencies is affecting the ease of doing business in the country. Besides, it is also impacting the logistic costs of the companies.

The proposal, being worked out by the revenue department, will also help in preventing goods and services tax (GST) evasion by unscrupulous traders who take advantage of the loopholes in the supply chain, an official told PTI.

Touted as an anti-evasion measure, e-way bill system was rolled out on April 1, 2018, for moving goods worth over Rs 50,000 from one state to another. The same for intra or within the state movement was rolled out in a phased manner from April 15.

Transporters of goods worth over Rs 50,000 would be required to present the e-way bill during transit to a GST inspector if asked

“The integration of the e-way bill system with FASTag and LDB is expected to help boost tax collections by clamping down on the trade that currently happens on a cash basis,” the official said

The National Highways Authority of India (NHAI) has put in place the FASTag system for collection of toll electronically on national highways. FASTag also offers non-stop movement of vehicles through toll plazas

Integration of e-way bill with FASTag will help revenue authorities track the movement of vehicles and ensure that they are traveling to the same destination as the transporter or the trader had specified while generating the e-way bill.

It will also help the suppliers locate the goods through the e-way bill system. Transporters, too, would be able to track their vehicles through SMS alerts that would be generated at each toll plaza.

Similarly, Delhi-Mumbai Industrial Corridor’s (DMIC’s) container tracking services, also called LDB programme, would be integrated with the e-way bill to improve the logistics ecosystem.

The official said that the implementation of the proposal would require inter-ministerial coordination as integration would have several operational and technical challenges.

The new indirect tax regime GST was rolled out on July 1, 2017. With GST systems now stabilizing, the focus of the Central Board of Indirect Taxes and Customs is now on increasing compliance and checking evasion.

The government has also set up the Directorate General of GST Intelligence (DGGSTI) to investigate cases of tax evasion and conduct search and seizure operations under the GST Act, and erstwhile the Excise and Service Tax Act.

XaTTaX – World Class Automated eSolution for Return filing and e-Waybill

Source: Economic Times.India Times
GST provided much-needed reform to the logistics sector

GST provided much-needed reform to the logistics sector

The implementation of the goods and services tax (GST) ushered GST provided much-needed reform to the logistics sector in much-needed reforms in India’s largely unorganised logistics and transport sector, and helped speed up movement of trucks, according to industry executives.

Transporters and logistics players ET spoke to said the switch to GST led to at least 20% reduction in turnaround time of trucks after border checkposts were dismantled. Besides, they said, implementation of the e-way bill on consignments of Rs 50,000 and above was gradually freeing them from unnecessary checking by state government raid parties.

However, they said, full benefits of GST would only be realised with seamless passage through the currently clogged toll gates, along an end to harassment by state transport and tax authorities. The impact was much more in Uttar Pradesh, Bihar, Madhya Pradesh and Maharashtra, which were particularly difficult states for truckers to move through a year ago.

A recent Icra survey of 50 transport companies found turnaround time in road transport reduced 18-20% since implementation of GST. “There are already signs that introduction of GST is rapidly leading to reduction in time wastage and harassment at interstate borders as well as checking clandestine movement of goods,” said Vinayak Chatterjee, chairman, Feedback Infra.

However, SP Singh, senior fellow, Indian Foundation of Transport Research and Training, said a lot of states were late in implementing the e-way bill. “Maharashtra and Punjab implemented it only recently. It would take another quarter to fully assess impact. Also, state departments continue to create hurdles in movement of trucks,” he said. Singh said the government should also rationalise GST on transport services. Road transport and highways minister Nitin Gadkari told ET the sector had benefited most from GST. “Travel time of trucks has come down significantly as the country has become a common market with removal of border check posts in states. Ease of transportation has been our focus area,” he said.

Source : The Economic Times
GST to help drive new-age warehouses for India Inc’s ambitions

GST to help drive new-age warehouses for India Inc’s ambitions


New-age warehousing and logistics in India would be midwifed by the Goods and Services Tax (GST), which also aims to transform the South Asian nation into an integrated market for the first time since Independence.

Small and often ill-equipped storage space in the country would now give way to neatly stacked, air conditioned warehouses, with higher levels of automation, as India ushers in the biggest tax reforms since 1947. And driving the change in India’s supply chain landscape are the consumer goods companies, such as Hindustan Unilever, Glaxo Smithkine, and Johnson & Johnson.

These companies are now putting out tenders for consolidating their supply chain operations into bigger warehouses. The new facilities will now cover about 450,000-500,000 square feet of space, almost five times the biggest warehouses in India right now. Logistics majors such as DHL, Allcargo and Mahindra Logistics are leasing bigger logistics spaces, while real estate developers such as Everstone Group’s IndoSpace are investing billions in building bigger storage facilities.

Big Investments, Bigger Facilities
The Indian supply chain arm of the Deutsche Post DHL Group, the world’s largest logistics company, is investing EUR150 million in more than doubling its warehousing space in the country to 7 million square feet. IndoSpace, India’s top builder of such facilities, is investing $1 billion to set up 30 million square feet of warehousing space in the country. IndoSpace is a venture of the Everstone Group and Realterm Global. Mahindra Logistics is leasing 1 million square feet of warehousing space: Avvashya CCI Logistics, the joint venture of the group that owns Allcargo with CCI Logistics, is almost doubling warehousing space to 5.5 million square feet in the next few years.

“There is a major spell of consolidation in the warehousing segment right now,” Pirojshaw Sarkari, CEO of Mahindra Logistics told ET in a recent interview.

“Historically, all warehousing was based on tax laws. That meant that in nearly every state, a company needed to have a warehouse, which was more of a godown. Otherwise it would have to pay central sales tax and state sales tax. Post GST, with a uniform tax structure, large-format modern warehousing will come up in a big way. And they will be closer to consumption centres,” he added.

One Nation, One Tax
Under the new tax regime, a centre and state GST will be levied on a common base of goods and services and an intergrated GST will be levied on inter-state transactions. It seeks to obliterate the multiplicity of taxes, mitigate cascading tax impact, do away with multiple check-posts thus ensuring smoother transportation, make for seamless credits and rationalize the warehousing structure in the country, while improving cargo transportation standards.

FMCG companies are taking the lead on the warehousing side. Mahindra Logistics recently won a bid to manage a 250,000 square feet of warehousing space at Vapi, Gujarat, for Hindustan Unilever, said Sarkari. GSK and Johnson & Johnson have put out tenders to consolidate warehousing functions, he added.

GST to help drive new-age warehouses for India Inc's ambitions

A spokesperson of Hindustan Unilever said it had “no specific comment to offer”. Emails sent to GSK and Johnson & Johnson remained unanswered when the report was sent for publication.

“The consolidation will incentivize the holding of inventory at select locations,” said V Balaji, CEO contract logistics at Avvashya CCI Logistics. The exercise will potentially lead to a 15%-18% savings in logistics costs for a company, he said.

Balaji said FMCG companies currently have more than 60 warehousing facilities scattered across the country. Those will be clubbed to 12-16. Avvashya CCI currently has 23 warehouses in the country. That number will remain the same even though the space will increase two-fold.

Beyond Consumer Goods
Companies from other sectors are getting into it too. Vodafone, for instance, clubbed its entire warehousing functions of seven different circles in the western region to one mother warehouse in Pune, said Sarkari, whose company got the contract. In Vodafone’s case, the scope of the project also included redesigning the warehousing structure, which meant Mahindra and consultant Ernst & Young also had to map a whole new hub and spoke warehouse network, he added. Vodafone India didn’t respond to emailed queries.

Property developers were the earliest to sense the change in trend.

“As a company, we have always focused on a post-GST scenario and generally stuck to building large warehouses up to 500,000 square feet. Recently, we have seen a pick-up in demand for such facilities among our customers. What GST does is remove the punitive nature of the current structure and the biggest benefit will be in terms of reduced operating costs,” said Brian Oravec, CEO IndoSpace, which has 24 logistics parks across the country.

More companies in the automotive space are now looking at setting up stockyards to stack up vehicles instead of transporting them straight to the dealerships from manufacturing centres. The shift will lead to higher standards in automation with some investments towards robotics.

Supply Chain Automation
Mahindra Logistics, for instance, is looking at alliances with robotics companies for its bigger warehouses, said Sarkari.
Frank Appel, the global CEO of DPDHL, said in a recent interview that the company would in the future carry out some pilot projects in India in the robotics space. He did, however, point out that cheap labour costs in India make it more feasible to invest in manpower here.

DHL is already doing paperless picking and sorting at some of its facilities.

“Right now, our warehousing presence is primarily in and around metro cities. The next phase is going to state capitals such as Lucknow and Jaipur,” said Vikas Anand, managing director, DHL Supply Chain, India.

Avvashya CCI Logistics is planning to spend Rs 250 crore-Rs 300 crore in upgrading the automation processes at its facilities, said Balaji.
Facility usage patterns may also change after GST is introduced.

DHL’s facility in Bhiwandi, Maharashtra, is a multi-client site catering to companies in the automotive, retail, and FMCG sectors.

To be sure, a large patch of uncertainty over the new regime has led some companies to adopt the wait-and-watch stance. These include multiple state-wise registrations as opposed to a single centralised registration currently, manifold increase in paperwork (a total of 37 tax returns need to be filed for every state annually), stringent conditions for claiming credit, and complexities in billing.

“We still await full clarity on how GST will work out for logistics firms,” said Suresh Bansal, head of international business at DTDC Express Ltd. “We of course appointed firms such as KPMG and Ernst & Young to get us to be GST-ready. But it will be very complex for many companies,” he added.

A spokesperson at Amazon India, which is heavily investing in building its own supply chain network, said the company “will wait to see the fine print for GST implementation, particularly on movement-related documentation,” to assess any potential impact on its network.

“The key question here is also whether the freight via road transport will actually move faster, which is also what GST seeks to achieve. There is less clarity on that yet. It will be at least 12-18 months before companies across sectors completely come on board the new regime,” said Anand of DHL.

Source :  ET
GST would mean jumble-free highways

GST would mean jumble-free highways

India’s logistics industry is worth over $130 billion and is critical to the country’s plans to mature into an economic superpower. However, it wouldn’t be possible unless a more efficient logistics industry is in place

Image for representational purpose only ( Photo: Babu Babu / Reuters)

The GST will be implemented this year. The new law is expected to help the overall growth of economy and a softening in prices and may even translate into a 2 percent GDP growth, according to experts. Besides making taxation simpler, the GST will impact all industries, of which the most remarkable effect is expected to be on transport and highways.

India’s logistics industry is worth over $130 billion and is critical to the country’s plans to mature into an economic superpower. However, it wouldn’t be possible unless a more efficient logistics industry is in place. The GST is expected to remove bottlenecks in the full-fledged development of logistics infrastructure and lead to smoother transport system. The GST would replace the obsolete and inefficient transport system of yore that was built around the state taxation system.

Analyzing the problems of the logistics industry Logistics should ideally make commercial activities efficient, but it is caught in the web of complex rules and regulations. There is a lot of paper work involved that impedes the flow of goods. Transporters are required to have in their possession hard copies of invoice as well as various forms. All this leads to enormous delays. The GST, however, will eliminate queues at state border checkpoints. Documentation will be simplified. All this should cut down the high average waiting time and stoppages on highways.

With a single GST in place, monitoring and collection of sales tax at interstate barriers would be obviated. A survey estimates that if the waiting time of trucks at various interstate checkpoints is reduced by half, it will lead to an additional 8 percent trucks on highways. The GST would translate into increased uptime for trucks, decrease in idle hours, better turnaround times and optimized warehousing structure.

The current scenario is however far from ideal. Currently, central and State governments levy different taxes separately. A Ministry of Road Transport and Highways report says that a typical truck spends 16 percent time at check-posts. On an average, a truck in India runs an annual distance of 85,000 km compared to 150,000 to 200,000 km in Western countries. The industry is fragmented due to the state-level tax structures, which forces enterprises to put up warehouses in every state. This makes the supply chain longer than necessary and to a certain extent inefficient. Additionally, due to the complex tax structure, the transport industry spends 50-60 percent of resources on tax compliance and deposit of interstate sales tax.

“The GST eliminates double taxation and enables a shared national market. This leads to better collections. Most importantly, the GST prevents or at least de-incentivizes tax evasion,” says Somesh Misra, VP, Product, Deskera.

GST would bring startups and SMEs at par with big corporate houses
Currently, big corporate houses “stock transfer” goods to other states and avoid paying tax on interstate movement. However, that is not the case with small players. Due to lack of infrastructure, SMEs and startups can’t do that and have to procure goods through interstate sales (in the place of stock transfers) and have to pay Central sales tax on them. In this regard, the GST brings startups and SMEs at par with the big corporate houses as stock transfers would be taxed as well.

Logistics includes transportation, warehousing, distribution and optimization. The GST will lead to concentrated logistic supply chains which are efficient, eventually leading to centralization to make the process of claiming credits easier. Tax compliance hitches would also get resolved. Regional warehouse hubs would emerge since a manufacturer won’t need warehouses in every state. This would lead to centralization of resources and consolidation of the industry.

I expect key business hubs to emerge. Manufacturers can, therefore, have a hub, for instance, in Delhi which can cater to the entire north region, doing away with the need to have a separate warehouse for every state separately. The logistics chain, consequently, becomes leaner and smarter.

All said and done, the GST is not effective now and only time will tell the exact effectiveness of the new law after its implementation. The proof of the pudding is in the eating.

Source : Forbes India

Logistics Associations meet GST Working Group; seek exemption for Export-Import trade services

Logistics Associations meet GST Working Group; seek exemption for Export-Import trade services


In a bid to ensure the smooth implementation of GST, the Central Board of Excise and Customs (CBEC) on 24 March, 2017 constituted ‘GST Working Groups’ to interact with select industry sectors to address their concerns relating to GST implementation issues. Accordingly, the Government designated officers to address issues relating to certain identified sectors like transport & logistics, to submit their report by April 10, 2017.

On April 4, Mr J. M. Kennedy, ADG, DGR, Working Group, Transport & Logistics-GST had an interactive meeting in Chennai with the Logistics Industry leaders from Federation of Freight Forwarders Associations in India (FFFAI), Air Cargo Agents Association of India (ACAAI), Association of Multimodal Transport Operators of India (AMTOI) and Consolidators Association of India (CAI). FFFAI was represented by Mr Samir Shah, Chairman; Mr A.V.Vijaykumar, Vice Chairman and Mr S Ramakrishna, Vice Chairman. Also present at this meeting was eminent tax consultant and advocate Mr Vatheeswaran to represent the industry.

Welcoming the basic objective of the tax reformation called Goods and Services Tax (GST) as a revolutionary step, the associations maintained that there are certain provisions in the proposed GST Law causing concerns for freight forwarding, customs broking, logistics services and manufacturing & exports industry in the Country.

The joint delegation emphasised on exemption from new tax burden to be levied by GST structure on the freight forwarding, customs broking and logistics industry as a whole, which hitherto have been exempted to make Indian manufacturing & export less expensive and competitive in the international market.

The association leaders pointed out that currently, freight forwarding in the air and sea cargo segment there is no Service Tax, based on Rule 10 of the ‘Place of Provision of Service Rules 2012’, which provides that in respect of taxation on transportation of goods (other than mail or courier) criteria should be the ‘Place of Destination of Goods’. In the freight forwarding segment including air and sea cargo pertaining to export of goods from India, the place of destination is outside India and, as a result, Service Tax is not payable. This aspect was also confirmed by CBEC by a Circular issued on August 12, 2016.

However, the proposed GST law plans levy of GST on International transportation as well as freight forwarding which is in variance with the GST Provisions in other countries as well.

In addition, in the international air segment all airlines have registration in India and when a freight forwarder purchases an air freight slot/space from the airline, the tax would be applicable as per GST rate on services. Currently, there is no tax imposed on freight forwarders for the same.

The associations further observed that GST on freight forwarders will only be passed on to exporters resulting in exports from India to be more uncompetitive, defeating the objective of GST and ‘Make in India’.

Similarly, levy of GST on import cargo would also result in double taxation (since on the entire freight, customs duties are being levied under Section 14 of the Customs Act) affecting re-export or Export-Import trade.

Concern over Registration and Data/Return Filing:

The GST Law indicates that SGST registration could be required in every State where there is a supply of goods or services or both. Currently, for service providers, the law provides for a centralised registration and compliance. The rule exists in view of the fact that logistics related services, especially in Export-Import trade, are different from the traditional manufacturing sector.

It has also been noted that under the GST regime supplier will have to file data online on 10th and  15th of every month and a monthly return on 20th apart from an annual return. This would mean 37 filings per State if Statewise Registration is implemented. In addition, if TDS and ISD is applicable there would be 61 filings in a year per State.

Highlights of the recommendations:

•             International transportation of goods by all modes including freight forwarding should be zero rated. Alternatively, both international transporting pertaining to that should be exempted

•             Ancillary services related to international transportation of goods like customs clearances, warehousing, storage, cargo handling, packing, unitisation, port, airport, terminal etc should be zero rated or exempted

•             Concept of centralised PAN based registration must be retained whereby service providers in the international transport segment can have a centralised registration and discharge applicable taxes through GST portal

GST will increase productivity and efficiency

GST will increase productivity and efficiency

Raaja Kanwar, Vice Chairman & MD, Apollo International, tells Anilesh S. Mahajan that the logistics industry is poised for growth.
Raaja Kanwar Vice Chairman & MD, Apollo International

What changes will GST bring in to your sector?

The introduction of GST will incentivise the logistics sector in India. It is expected to act as the secondary factor that will build upon the primary foundation of a good infrastructure and faster adoption of technology in the sector. Implementation of GST would increase productivity and raise efficiency levels in the logistics sector and the economy as a whole. According to various industry estimates, freight times will come down by 30-40 per cent and logistics costs are expected to reduce by 20-30 per cent post GST. It will not only invite more investments and capital, but also ensure better implementation of investments and more access to better technologies.

How will the government’s end-to-end delivery model, via a JV between Railways and DMIC, disrupt this space?

It will not disrupt the market. It is impossible for one company to cater to the entire logistics space, especially a market as big as ours. It is actually going to be helpful and will give a huge impetus to the sector, and help consolidate Apollo’s logistics business.

The government plans to invest heavily in creating infrastructure. Will it make life any easier for logistics players?

The government announced huge investments in the infrastructure sector in the Budget which is in continuation with its increased focus on infrastructural development over the past few years. The total allocation for infrastructure stands at Rs 4,00,000 crore approximately, and the total capital outlay for the transport sector at an estimated Rs 2,50,000 crore. The Budget allocation for highways alone stands at Rs 64,000 crore in 2017/18. The increased investment in the infrastructure sector augurs well for the logistics players. Over the years, the industry lost out on a lot of business potential because of infrastructural deficiencies in our country. We are ready for this change as it will fasten the growth of the logistics industry in India.

Source :

Impact of proposed GST on Indian Logistics Industry

Impact of proposed GST on Indian Logistics Industry

Overview of Indian Logistic Industry:

Logistic Industry Impact

The Indian logistic industry is expected to grow steadily, led by e-commerce penetration, economy revival, proposed GST implementation and government initiatives like “Make in India”, National Integrated Logistic Policy, 100% FDI in warehouses, food storage facilities, etc. Transportation alone holds 60% share of the logistic industry and rest 40% is contributed by warehousing, freight forwarding, value-added logistics, etc. Furthermore, with respect to India’s GDP growth the logistics industry is expected to grow at 1-1.5x as logistics business is directly correlated with economic activity. Considering the aforementioned aspect, the Indian logistic industry is projected to grow at CAGR of 15-20% during FY16~FY20. Despite these reasons, the logistic sector in India remains entangled in several complexities which primarily includes higher logistic costs and complex tax structure. The implementation of Goods and Service Tax (GST) bill is expected to trim the logistic costs upto 20% from the current levels, however, the persisting high logistic costs could only be resolved by development of logistics infrastructure.

The Indian logistic sector is primarily categorized into four segments comprising transportation, warehousing, freight forwarding and value-added logistics. The transportation which contributes maximum to the whole pie of logistic sector comprises various means such as road, rail, air and water. India being emerging country with prime dependency upon transportation through land, i.e. through road and rail together which contributes about 60% followed by Warehousing 24.5% compromising industrial and agricultural storage.

Segmentation of India Logistic Industry

Segmentation of India Logistic Industry

Current Issues and challenges

Despite being a lower cost service providing country, India has higher logistics cost due to various issues and challenges faced by the industry. Apart from being entangled in complex tax structure, the industry is also affected by poor rate of customs efficiency of clearance processes and procedures thus affecting the international export logistics stratum. Furthermore, sub-optimal comfort provided by the existing Indian infrastructure combined with lack of implementation of efficient IT-enabled tracking and tracing mechanisms has adversely affected the performance of logistics. The current article delineates upon the complex tax structure issue faced by the logistic industry and the benefits that this industry would derive upon implementation of GST, thus providing respite to certain extent to the industry.

Complex tax structure:

Currently, each of India’s 29 states taxes goods that move across their borders at various rates. As a result, freight that moves across the country is taxed multiple times.

Tax Structure

How the introduction of Goods and Service Tax (GST) would benefit the Indian logistic industry?

Goods and service tax is a colligation of multiple taxes levied by both Central (i.e, excise duty, countervailing duty and service tax) and state (Value-added tax, Octroi and entry tax, luxury tax, etc) governments when an end-user purchases goods or services. It means same level of taxation would be charged on a specific product or service across the entire country irrespective of being manufactured and sold in different states. The planned dual GST model (central GST and state GST) proposes to replace around 29 state and federal taxes and tariffs for a single tax at the point of sale. The current combined Centre and State statutory rate for most goods works out to be 26.5% (Cenvat of 14%, and VAT of 12.5%), whereas post GST implementation the same is expected to reduce to standard rate of about 18-21% which will be levied on most goods and all services.

Inter State Taxable Supply

CGST: Central Goods and Service Tax; SGST: State Goods and Service Tax; CVD: Countervailing Duty; SAD: Special Additional duty

The following table illustrates the expected benefits that Logistics industry would derive post implementation of GST:

pre GST and post GST

The rollout of GST, in India would dissolve the existing indirect tax structure, ie, multiple taxes that is being split between center and state governments leading to reduction of about 20% of current logistic costs.

Impact of GST on Third party Logistic service providers (3PL):

Post GST implementation the 3PL’s would have to restructure its assets and realign its operations in line with changes in the operations of its customers in the new scenario. Currently, 3PL’s have warehouses located near major distribution centers of its key clients (different industries) irrespective of its geographic disadvantage mainly to avoid interstate taxes. However, post GST implementation 3PL’s are expected to build integrated warehouses at logistic suitable locations. So accordingly, 3PL’s would have to restructure the assets to accommodate the long distance consignments which will occur with this scenario of free movement of goods across the country.

The consumer durables sector is expected to witness maximum drop in the logistics costs as percentage of total sales, as their warehouses are built at different states to avoid interstate tax. Mostly, the consumer-oriented industries are going to have high impact of GST on its operations model rather than capital intensive industries.

Major Challenge –To sail the GST bill through the headwinds of political and democratic embroilment:

The GST bill although has passed its acceptance through Lower House in May 2015 after religious deliberations, it is yet to be passed by the upper house of the parliament (Rajyasabha). Post this, bill has to be passed through respective state governments in state assemblies and it has to be ratified by at least 50% of them. Once the bill receives approval from majority of the state assemblies, the government has to arrive at a revenue neutral rate so that the implementation of the proposed new tax structure will not have negative implications on revenues of states and central. Furthermore, the government has to formulate the principles for levy or exempt of the tax in the course of interstate trade with consistency and relevancy the rules for ‘Place of supply’. After traversing through all the aforementioned phases, once the draft GST bill is out, the Central government has to compile all the views of the stakeholders and make an error- free and uniform GST legislation.

The hurdles and milestones which the bill has to face and cross before it is actually implemented is a tedious and time guzzling task at every stage of passage lest there is drive to expedite the same.

Apart from above the success of GST depends upon robust IT network connecting all the state governments, trade, industry, financial institutions, etc. The development of real time business model by the special purpose vehicle in the name of Goods and service tax network (GSTN) promoted by Government of India, various state Government bodies and non-Government financial institutions plays a vital role.

Source : Care’s Rating

Truck queues at state borders check posts may end soon

Truck queues at state borders check posts may end soon

Truck queues

Traffic congestion at border check posts could be a thing of the past with the GST Council setting up a task force, to ensure seamless movement of freight across the country and reduce losses to the economy, due to frequent stoppages.

A study conducted by IIM-Kolkata has estimated loss to the economy due to delays at border check posts at $6.6 billion, apart from the cost of fuel due as transporters deal with documentation of nearly 20 state and Central government agencies. Another study undertaken by the road transport ministry has revealed that less than 1% of trucks were detained for not having proper documentation.

 Several states such as Maharashtra, Rajasthan and Haryana have done away with physical checks at border posts on some vital freight routes and instead rely on flying squads. This has significantly cut down delays at border check posts, sources said. Introduction of the Goods & Services Tax (GST), a key reform measure, is expected to usher in seamless movement of goods across the country but border check posts remain an irritant. An analysis of the pile-up at border check posts has shown the delays are largely due to physical verification of documents by state commercial tax and transport departments.
 Sources said the proposed task force would comprise officers from finance and transport departments of some states, the ministry of road transport and highways and the department of revenue to examine the “issue of creating an eco-system for seamless freight movement.” It is expected to submit its report to the council, which may call for a meeting of the state finance and transport ministers to discuss the issues and decide on the mechanism for “seamless road connectivity.”While the e-bill proposed under the GST regime is expected to support seamless movement from the point of view of the commercial tax department, but if the practice of transport documentation checks is continued, it is unlikely to reduce congestion at checkpoints and ensure “barrier free freight transport across the country.” There are various options to reduce pile-up at check posts. For example, the “Vahan” database of the road transport ministry is used to generate bills by the Goods & Services Tax Network, the IT backbone which will manage GST.
The radio frequency identification (RFID) tags installed on vehicles can be used for checking the identity of vehicles, and the effort should be focused on reducing physical checks and eliminate check posts.
Source : TOI
GST to reduce documentation for logistics firms: CBRE

GST to reduce documentation for logistics firms: CBRE

The Goods and Services Tax (GST) is likely to result in a reduction of documentation for logistics companies, helping them improve their turnaround time and client outreach. The removal of various federal tax barriers and creation of a common market will also improve supply chain efficiency and attract more foreign direct investment (FDI).

Stipulations in the proposed law are expected to result in better tax conformity, while removing the cascading effects of the current tax regime.

“The GST will make doing business in India tax neutral, irrespective of location. For a warehousing operator, investment decisions will no longer be dictated by the comparative tax advantages of various states, thereby enabling them to make decisions based on supply chain efficiencies,” said Jasmine Singh, head – industrial & logistics services, CBRE South Asia Pvt. Ltd., in his article.

According to a survey conducted by CBRE on India’s warehousing industry, more than 63 per cent of the respondents felt that GST would be positive for their overall business operations in India. They are hoping for reduced operating costs, and aiming to consolidate their facilities and expand their footprint around major consumption centres.

Approximately 45 per cent said that their cost of warehousing operations is likely to decline once the GST comes into play, while around 25 per cent were cautious and felt that it is too early to assess the actual impact. However, the majority of respondents said that they are already prepared for GST and would be able to align their business to the new regulations.

GST to reduce documentation

About 65 per cent believe that they will need a minimum of 3 to 12 months to align their existing business strategies with the new tax structure.

Close to 52 per cent of survey respondents currently have multiple warehousing facilities in one state/city. When questioned, 28 per cent of respondents said this is the most effective way to operate given the multiple local taxes involved. Close to 38 per cent of companies surveyed also feel that this is the most suitable mode of operation based on their current business model.

However, in the post-GST scenario, the concept of a mother warehousing hub for a region supplemented by spokes is expected to become more popular. Around 11 per cent of companies surveyed said they would prefer to adopt the hub and spoke approach in the post-GST regime, compared to only 6 per cent now.

“Once the GST comes into play, the focus of players is likely to be on supply chain efficiencies which will result in consolidation of warehouses. This will result in increased demand for larger, better quality warehouses thereby providing an ideal platform for the emergence of large scale nationwide players,” added Singh.

The CBRE survey reiterates the fact that most warehousing players view the implementation of GST as a positive move. On the whole, the reform will be in the larger good of the sector resulting in the emergence of better quality, investment worthy assets. (KD)

Source :



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