April 1, 2023

How logistics sector has been a major beneficiary of GST

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The Goods and Services Tax (GST) overhauled the indirect taxation regime in India. Hailed as the biggest tax reform since independence, GST was implemented in India after decades of discussion in July 2017.
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1. Eliminated confusion and complexity
"Earlier, logistics companies were beset with confusion owing to different taxes charged in different states, entry tax, VAT, Octroi, CSR etc. This lead to increased costs and logistical challenges."
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"GST has reduced the number of tax systems that businesses deal with, making it simpler for them to comprehend and follow tax laws. This has also aided in lowering corruption and tax avoidance."
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2. Simplified tax procedure
"Not just logistics, but one of the key benefits of GST across industries is the simplification of tax procedures. It has replaced multiple taxes with a single tax, thereby reducing the burden of compliance for logistics companies."
"As a result, it takes less time and money to transport goods across state borders, leading to faster delivery and increased efficiency in the supply chain."
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3. Elimination of entry tax
"Entry tax is charged by states when transport vehicle carrying goods enter their borders. GST has eliminated the need for warehousing and distribution centers in each state, leading to cost savings for logistics companies."
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"Earlier this was done to save tax, but with a simplified nationwide taxation system, this cumbersome process is out of the way."
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4. Input credit system
"With the implementation of GST, companies can now claim tax credit for the taxes paid on inputs such as raw materials, equipment, and services."
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"This has reduced the overall tax burden on logistics companies, leading to a reduction in the cost of goods transported, thus, making logistics more affordable for businesses."
5. Reduction in paperwork
Post-implementation Goods and Services Tax, logistics company have to deal with lot less paperwork compared to before, as the e-way bills under GST has also enabled a trouble-free supply of goods.
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It is the only document which is required with transport vehicles, making documentation lot less complicated.
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6. No state-level check posts
"Thanks to GST, there are no longer any state-level check points where vehicles can be stopped and inspected, hence, the process of transporting goods across state borders has become more streamlined and cargo is delivered more quickly."
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"Therefore, businesses that depend on prompt transportation of goods have benefited from the decrease in transit times and speedier delivery of goods as a result."
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