GST impact: Queues of trucks across 22 States get shorter

Posted by Daily Shipping Times on 05-07-2017        Tweet

NEW DELHI: The roll-out of the goods and services tax (GST), which subsumed all the major Central and State taxes, will ensure smooth movement of trucks across State borders.

Border commercial tax check posts have been abolished in 22 states, including Andhra Pradesh, Bihar, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Tamil Nadu, Sikkim, West Bengal, Delhi, Haryana, Odisha, Rajasthan and Uttar Pradesh, after the GST launch on July 1.

Saloni Roy of Deloitte said the move would result in ease of logistics and transportation for companies. The abolition of check posts and the very concept of GST would help firms rationalise their warehouses, she added.

In the previous value-added tax (VAT) regime, central sales tax was charged during Inter-State movement of goods. To avoid that, companies used to do inter-branch transfers where the CST was not imposed. For that they used to set up warehouses in various States.

Now, the GST will be imposed even on inter-branch transfers but input tax credit will be given, which was not the case under the CST. This will help companies reduce their warehouses, she said.

“Freight and logistics networks will realign according to the location of production and consumption activities, creating the hub-and-spoke models that are needed to improve freight and logistics performance,” it added.

However, the GST system might have a mechanism to track goods entering a State, or even Intra-State movement. The e-way bill system proposed a threshold of Rs 50,000 over which prior online registration of a consignment was required. That bill was deferred by the GST Council at its meeting in June as there was no consensus.