Logistics stocks in demand as GST set for roll-out on 1 July 2017

Shares of nine logistics companies were up 0.51% to 3.95% at 11:21 IST on BSE after the Goods and Services Tax Council broke a deadlock over issues of administrative control over assessees and broadly agreed to roll out the GST from 1 July 2017.

Snowman Logistics (up 3.95%), Gati (up 1.99%), Allcargo Logistics (up 1.35%), Gateway Distriparks (up 1.34%), Container Corporation of India (up 0.87%), VRL Logistics (up 0.67%), Blue Dart Express (up 0.51%), TCI Express (up 0.6%) and Aegis Logistics (up 1.03%) edged higher. Sical Logistics (down 0.36%) fell.

Meanwhile, the S&P BSE Sensex was down 52.04 points, or 0.19% at 27,236.13

The Goods and Services Tax (GST) Council yesterday, 16 January 2017 broke a deadlock over issues of administrative control over assessees and broadly agreed to roll out the GST from 1 July 2017, instead of the earlier deadline of 1 April 2017.

The GST council agreed that the Centre would assess 50% of the assessees under Rs 1.5 crore annual turnover and the states the other 50%. As much as 90% of the assessees with less than Rs 1.5 crore annual turnover will come under the states and the balance 10% under the Centre, report added.

On the second contentious issue of levying tax on the high seas or within 12 nautical miles of the coast the GST Council decided to go along with the states, which wanted to retain the power to tax economic activity although it maintained that constitutionally, the Centre had jurisdiction over territorial waters, reports added. For entities with annual turnover above the Rs 1.5 crore threshold, the Centre and states will share control equally but each taxpayer would have to deal with only one agency and be assessed once.

As per reports, the next meeting of the GST Council has been convened on 18 February 2017. By that time, changes to various bills will be worked out and will be ready to be passed by Parliament and state Assemblies. Rules and segment-wise GST rates will take time till March to be finalised.

GST, touted as the single biggest indirect taxation reform since independence, will simplify and harmonise the indirect tax regime in the country. The GST seeks to create a seamless national market in the country by replacing plethora of state taxes and central taxes by one tax. The GST is likely to benefit consumers, produces, and the Government.

Logistics firms could benefit from the removal of inefficiencies in interstate taxation and check posts.

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