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.
Also, eight states — Assam, Himachal Pradesh, Manipur, Meghalaya, Nagaland, Punjab, Mizoram and Tripura — are in the process of removing them, an official statement said here on Monday. However, there will still be toll collection points. The new indirect taxation system is aimed at creating a common Indian market. As such, entry tax, octroi
and central sales tax
(CST) were abolished with the roll-out of the new system.
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.
India figured 172nd among 189 nations in 2016 in the ease of doing business, ranked by the World Bank. Within taxes, the CST payment used to take 105 hours and the rate constituted 14.5 per cent of companies profits, according to the report. According to the estimates of the World Bank, halving the delays due to roadblocks, tolls and other stoppages could cut freight times by 20-30 per cent and logistics costs by 30-40 per cent. “This alone can go a long way in boosting the competitiveness of India’s key manufacturing sectors by 3-4 per cent of net sales, thereby helping India return to a high growth path and enabling large-scale job creation,” it 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.