Multiple tax rates, which form an integral part of India’s goods and services tax (GST) regime, have been causing problems for the logistics industry, Maharashtra GST Commissioner Rajiv Jalota said at an industry event.
Mr. Jalota, however, justified the introduction of a multiple rate system by the government at the Logistics Summit organised by CII Institute of Logistics. he said, “We had to have a dual tax because of the federal structure of our country. That led to an IGST (Integrated Goods and Services Tax) model to provide complete and seamless availability of credit.”
He said the tax was paid by the buyer in place of CGST and SGST, while the seller was exempted from any payment. However, this had caused some complications, especially in terms of the place of supply. Mr. Jalota said, “With GST being a consumption tax whose multiple rates come into play depending on the location of consumption and whether the transaction is between regions or States, it has not been smooth sailing for the players in the industry.”
However, he said the government had taken steps to mitigate this. “The GST Council has given authority to a small committee of officers called the GST Implementation Committee, which has been empowered to take certain decisions without waiting for the GST Council to meet. These decisions get converted to rules or notifications and then get post-facto approval from the GST Council,” Mr. Jalota said. He added that the government has released FAQs to resolve some major issues.
Mr. Jalota said the government’s expectations had not been met. “We were hoping that with the growth in registrations and the inbuilt checks of the tax system, the tax base and tax compliance will increase. And hence tax payments will increase. Although, there was a rise in revenue, it was not as much as expected.”
Mr. Jalota said the government has been rationalising the tax structure and in November last year it had reduced rates on more than 200 commodities. He indicated that the government was aiming for a maximum of two to three rates on every commodity, with certain exceptions.
He said the government’s decision to shift the entire tax filing system online by way of the e-way bill had made it difficult for the unorganised sector, which constitutes a significant part of the logistics industry in India, to cope.
“The smaller players are facing some additional compliance burden right now. We hope to come out with a more hassle-free, industry-friendly return system in a few months,” Mr. Jalota said.
Despite the hiccups, there has been some positive impact of the tax on the logistics industry. R. Shankar, CEO, TVS Logistics Services Ltd said, “The movement of goods, for example, has gone up from 300-350 km per truck each day to almost double. There has also been a 7-11% fall in transit time and the number of warehouses required have reduced in cases like the National Capital Region where instead of five warehouses one can now use just one due to the single tax.”
