15 Jul 2017Posted By: Pulkit Gupta


Impact of GST on Indian Transport industry | GST on Transportation

Goods and Services Tax is one of the burning issues which have become a matter of discussion these days. Everyone is trying to understand the impact of GST on different industries. In this article, we are going to focus on the impact of GST on Indian transport industry. Good and Services Tax (GST) has replaced all other indirect taxes from the country and has changed the tax structure of the biggest democracy. It is now going to be the only indirect tax in the whole country. It was introduced under 101st Amendment of the Constitution. It was first proposed in the year 2000 and was historically launched in the midnight of 30th June 2017.


GST has made the taxation simpler and efficient and is going to benefit the industry directly or indirectly. The transport industry is one of the industries which are going to be the most benefitted due to GST. Transportation is the lifeline for any industry. It plays a vital role in carriage inward, logistics, transportation of materials etc.


The transport industry is highly unorganized in India with a lengthy supply chain. This ultimately increases the cost of transportation. As the taxes imposed by states are different, the adoption of a new tax system will now bring revolution and will make the things simpler.


Most of the industries get some benefits from GST. But from the various industries, the one industry that benefits the most is the transport and logistics. Country's transport and logistics sector will be most beneficiaries of the GST implementation. The overall tax on the supply of goods is about 29%. With the help of GST, the revenue rate will become lower than this rates. This will relax to the load of the tax burden on consumers. 


The Road transportation in our country is an essential part of industries. GST will make the changes are also expected to solve the problems of transport sector as well, the interstate transport of goods quickly without any cause or documentation and get rid of long queues at checkpoints. The solution to this problem is the E-way bills brought by GST are taken the place of waybills and other transports bill.


GST rate tariff in India has been categorized into 6 categories. Four main GST slabs of goods and services include; 5% for essential goods and services, 12% and 18% for standard goods and services and 28% for luxury goods and services. An essential goods and services will have no taxes under exempted categories. 

 

Transport Industry falls under essential services accordingly GST tax rate is 5% or exempted in some category.


GST is going to favor transport industry in following ways
Low cost
GST is going to decrease the cost incurred in transportation of goods and services. Earlier, there were many taxes like toll tax etc which were imposed by states. These taxes differed from state to state. Now, after GST the taxes are going to be single all over the country and hence the reduction in freight cost.


Emergence of key hubs
Manufacturers have extra leverage cost due to warehouses in every state. Now the acceptance of GST has made a great change. GST will facilitate warehouses in some major states with a flexibility of choosing warehouse according to their own convenience. 

 

Low time constraint
At present, there are many interstate checkpoints in which the local transports have to go through many paper works. This causes wastage of time. GST will reduce this time as only one tax will be applied all over the country.

Single tax system
As every state has its own taxes, many taxes are imposed on single freight. This unintentionally increases the overall cost of single freight. GST will replace this and there will be a single tax system all over the country. Thus, there will be a reduction in extra pressure on industries. 


Emergence of Organised sector
Due to excessive taxes, this industry has not been an organized sector till now but GST will make this sector organized as this industry will create greater opportunities. This will also attract new entrepreneurs to enter the market.


Thus, GST is going to be boon for the industries and we should support it with open hands. It has not only good impact for the short term but also in the long term it will be beneficial for every industry including transport industry.

In case you need assistance with GST Registration you can fill out our form and arrange a call from E-Startupindia business advisors or you can connect with us at 8881069069 

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