GST Ready India

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GST should translate into freer highways

May 12, 2017

The Goods and Services Tax (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% 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.

How the GST will remove the clutter from India’s highways

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 the 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% trucks on highways. The GST could translate into increased up-time for trucks, decrease in idle hours, better turnaround times and optimized warehousing structure.

“The GST eliminates double taxation and enables shared national market. This leads to better collections, which would be good both for the government as well as the logistics industry. Most importantly, the highways will serve their purpose of being the arteries of the country’s development,” said an official of a technology company.

This article was first published on LinkedIn by Muqbil Ahmar

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