'GST to benefit transport sector, drive consumption growth'

NEW DELHI: Country's transport and logistics sector will be a big beneficiary of the GST implementation, even as the indirect tax regime will drive a "consumption-led growth" in the country with less cess burden on consumers, says a report.

"The overall tax on the supply of indigenous goods is approximately 29.37 per cent. With the implementation of GST, the Revenue Neutral Rate will be much lower than the present tax rates on goods. This will lead to a lower tax burden for consumers, thereby facilitating a consumption-led growth," a CII-PwC Report on 'Goods and Services Tax - Transport and Logistics Sector' said.

On account of seamless credits, the issue of tax cascading will be minimised to a large extent, it said adding procurement costs may be reduced on account of reduction of non-creditable taxes. This will make the Indian industry competitive.

The report said the Indian industry will be able to migrate to an efficient supply chain model as against the present supply chain model, which is dependent on tax considerations vis-a-vis operational considerations and GST will contribute to the ' Make in India' and 'Ease of Doing Business' initiatives of the government.

Tushar Jani, Chairman - CII WR Logistics Sub-committee said, "Currently, a complex web of subsidies, tariffs and cascading taxation in the T&L sector has resulted in distorted pricing, created wasteful leakages and opportunities for rent-seeking. GST is expected to minimise the issue of multiplicity of taxes and tax cascading, especially in view of the seamless flow of credit."

It is anticipated that GST will result in consolidation of warehousing alongside facilitating seamless interstate flow of goods, he said adding, GST is also expected to provide an opportunity to dismantle various check posts, thus bringing about a substantial reduction in logistics costs.

Dharmesh Panchal - Partner, India - West Leader, Indirect Tax, PwC mentioned "There are several issues for the T&L Sector that needs to be addressed, such as place of supply rules, treatment of goods transport services... e-commerce supplies, withdrawal of check posts, etc. GST should be implemented in a way to reduce the tax costs for the T&L sector and simplify the compliance process, as this sector is critical to the economy."