The inception of Goods and Services Tax has cut the first turf towards streamlining the logistics industry in India. Previously, all states, within the country taxed goods, which were transported across at different rates. In a nutshell, the state authorities performed a comprehensive check of the goods, and levied an appropriate tax on the freight, which caused a dramatic increase in delivery time. Consequently, a significant transportation is lost in transit.
The most crucial advantage of GST is that it is now, a single tax on manufacture, sale and consumption of goods and service all through the nation. The purpose behind this move is to achieve the vision of India, as a unified common market, with only one indirect tax. On the basis of input tax credit method, GST will be collected at each phase of sale or purchase of goods or services. The subsuming and elucidation of taxes would mean that inter-state transportation of goods will become a notch efficient.
In the previous tax structure, delay in freight transition because of in numerous state taxes resulted in logistics costs, being shot up by 2 to 3 times, as compared to the set global standards. In succinct terms, logistics cost in India makes up for 13% of the GDP, as compared to 8% in western countries and about 18% in china.
However, the incorporation of GST, has paved the way for India, to become a seamless market for intra as well inter-state sales. This is a big boost for the logistics as it will alter, or completely change the prevailing ineptness in the industry, face-lifting the logistics scenario in India. Services providers can now operate large central warehouses and are free to remodel transportation routes.
Furthermore, competent taxation at national level and efficient cross-state transportation, along with drastically reduced paperwork for transporters, is bound to reduce logistics cost. GST, which was deemed to be the biggest tax reform India has ever witnessed, seems to fit the title.