- 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.
via GST impact: Queues of trucks across 22 states get shorter | Business Standard News
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