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GST being a destination based tax on consumption of goods and services have a major impact on logistics sectors. Logistics industry comprising 60% of transportation and rest 40% of warehouses, freight, forwardings etc. will be effectively and efficiently enhanced with introduction of GST.
Earlier, interstate tax burden misbalances the smooth functioning of logistics industry. This is entirely because in addition to corporate state tax of 2% the transponders have to disburse tax on exports of goods as well. The nature of industry was declining, in the sense, unorganised players were introduced in these areas resulting in fragmented industry. Due to entry tax, local body taxes, Octroi, etc. trucks lie idle for 30-40% which results in bad impact on logistics cost.
But by introduction of GST these problems reduced to a limit. The policy provides no tax on exporters, there will be uniform taxation which will reduce interstate tax burden. This called for major large players in the industry. As there will be consolidated tax logistic cost would reduced to 20%.Thus, this taxation system would leur more and more importers and exporters ,hence it will increase the overall GDP of the country .
With its pros ,there are some cons like introduction of e-way bill .A consolidated e-way bill in the required form is to be generated by the transporter prior to the movement of goods ,this will make tracking cumbersome for all parties. The validity period of the e-way bill, which is dependent upon the distance involved for transport of goods, is a great cause of concern.