GST to help logistic cos reduce cost, time up to 20%

25 Jul '16

5 min read

Thus, there is immense scope for optimization of costs, which will mostly be noticed in consumer-oriented industries rather than capital intensive industries, the report said.

Backgrounder: The proposed Goods and service tax is a colligation of multiple taxes levied by both Central (i.e, excise duty, countervailing duty and service tax) and state (Value-added tax, Octroi and entry tax, luxury tax, etc) governments when an end-user purchases goods or services. It means same level of taxation would be charged on a specific product or service across the entire country irrespective of being manufactured and sold in different states.

The planned dual GST model (central GST and state GST) proposes to replace around 29 state and federal taxes and tariffs for a single tax at the point of sale. The current combined Centre and State statutory rate for most goods works out to be 26.5% (Cenvat of 14%, and VAT of 12.5%), whereas post GST implementation the same is expected to reduce to standard rate of about 18-21% which will be levied on most goods and all services.

However, the bill that is being termed as revolutionary stands embroiled in political corridors of power. Although it was passed in the Lok Sabha in May 2015 it is yet to be passed by the Rajya Sabha. Post its passage in Parliament, the Bill has to be passed through respective state governments in state assemblies and it has to be ratified by at least 50% of them. Once the bill receives approval from majority of the state assemblies, the government has to arrive at a revenue neutral rate so that the implementation of the proposed new tax structure will not have negative implications on revenues of states and central.

Furthermore, the government has to formulate the principles for levy or exempt of the tax in the course of interstate trade with consistency and relevancy the rules for 'Place of supply'.

After traversing through all the aforementioned phases, once the draft GST bill is out, the Central government has to compile all the views of the stakeholders and make an error- free and uniform GST legislation. The hurdles and milestones which the bill has to face and cross before it is actually implemented is a tedious and time guzzling task at every stage of passage lest there is drive to expedite the same, the report said. (SH)

Fibre2Fashion News Desk – India

More GST News... More Textiles News - India...