Wait and watch for GST

Goods and Ser­vices Tax (GST), a much awaited uni­form tax regime which was ini­tially tabled in 2006-2007, is likely to be im­ple­mented al­most a decade later, from April 1, 2016. The GST Con­sti­tu­tional Amend­ment Bill was passed by the Lok Sabha on March 7, 2

Cargo Talk - - Front Page - KALPANA LOHUMI

The bill should be in­tro­duced by April 2016 to sim­plify taxes levied on the move­ment of goods across states and to re­duce lo­gis­tic de­lays.

But it seems like sev­eral Orig­i­nal Equip­ment Man­u­fac­tur­ers (OEMs) are not ready to take ad­van­tage of the changes in the tax struc­ture, to be ush­ered in by the im­ple­men­ta­tion of GST. How­ever, this will not im­pact the sup­ply chains, since the GST bill en­vis­aged by the gov­ern­ment re­duces the taxes on in­ter-state move­ment of cargo ve­hi­cle, but does not elim­i­nate it com­pletely.

The lo­gis­tics in­dus­try needs the Gov­ern­ment of In­dia to im­ple­ment the GST bill in the orig­i­nal for­mat. As days pass by and the gov­ern­ment strug­gles to get a con­sen­sus in the Ra­jya Sabha, the tax re­forms get di­luted. This is not good for the in­dus­try and the coun­try.

Na­tional lo­gis­tics play­ers are wor­ried about the need for fil­ing re­turns and rec­on­cil­ing ac­counts with 30 state author­i­ties as com­pared to a sin­gle ser­vice tax re­turn that they file to­day. It be­comes po­ten­tially chal­leng­ing since dif­fer­ent states treat val­ueadded ser­vices dif­fer­ently. Fur­ther the pro­posed one per cent ori­gin tax may lead to fur­ther com­plex­i­ties, since it would also add to the to­tal cost.

Uday Pal­sule

Gur Prasad Kohli

MD & Head of In­dia, Wal­le­nius Wil­helm­sen Lo­gis­tics

RS Subra­ma­nian

SVP & Coun­try Man­ager – In­dia, DHL Ex­press

Be­ing ready is a need and not an op­tion. The ben­e­fits and am­bi­tion be­hind the GST are well known and can­not be dis­puted. But as it stands to­day, there are many is­sues to be ad­dressed. There is a need for ra­tio­nal­is­ing the phys­i­cal checks, screen­ing and doc­u­men­ta­tion of in­ter-state move­ments na­tion­wide, en­abling IT and RMS-led sup­port for good move­ment.

Man­ag­ing Di­rec­tor, Spear Lo­gis­tics

When GST is brought into ef­fect, the sup­ply of goods and ser­vices will be­come tax­able, rather than their man­u­fac­tur­ing or sales. This fun­da­men­tal change al­ters lo­ca­tion of tax and thereby brings sup­ply chain firmly in the am­bit of GST.

Lead­ing com­pa­nies are al­ready pre­pared for fewer Dis­tri­bu­tion Chan­nels (DC) dic­tated by de­mand den­sity, op­er­a­tional foot­print rather than tax­a­tion. Lo­cal sale, stock trans­fer will not drive lo­ca­tion of ware­houses and trans­porta­tion vol­umes. Cus­tomer Ser­vice Lev­els (which in­flu­ence rev­enues) and Cost of Cus­tomer Ser­vice (in­flu­ences prof­itabil­ity of de­liv­ery net­work) will drive net­work de­sign. Whether to carry out ac­tiv­i­ties (such as bundling, la­belling and repack­ag­ing) within the DCs will be a choice, since GST will be payable only if in­put and out­put val­ues change. Large re­duc­tion in in­ven­tory lev­els is seen be­cause of re­duc­tion in the num­ber of ware­houses.

Once it gets im­ple­mented, fewer large ware­houses will han­dle high lev­els of trans­ac­tions. They will be re­quired to pro­vide very high trans­ac­tion ful­fill­ment, main­tain high in­ven­tory in­tegrity and pro­vide high vis­i­bil­ity and trace­abil­ity of in­ven­tory. With such large com­plexes, DCs will need to be well in­vested with ma­te­rial han­dling and stor­age equip­ment, IT and trained man­power. Need­less to say, or­gan­ised play­ers in ware­hous­ing will be able to play their role ef­fec­tively.

I am sure, with the given ben­e­fits of GST, in­dus­tries will be ready by the time it is im­ple­mented and will ac­cept it as a pos­i­tive change, due for a long time.

Yash­pal Sharma

Di­rec­tor, Sky­ways Group

GST in In­dia is en­vis­aged to re­place all in­di­rect taxes cur­rently im­posed by the cen­ter and states to foster a com­mon mar­ket.

The im­ple­men­ta­tion of GST by April 2016 ap­pears to be a strong pos­si­bil­ity now. Its im­ple­men­ta­tion will im­pact all in­dus­tries, across sec­tor. The op­por­tu­nity is huge for the lo­gis­tics com­pa­nies and their cus­tomers.

Suc­cess­ful im­ple­men­ta­tion of GST would boost the de­mand for ware­hous­ing by 15-20 per cent over the next five years. The en­tire sup­ply chain will need to be re­designed to reap the ben­e­fit of GST. The ware­houses will have to be closer to man­u­fac­tur­ing lo­ca­tions or con­sump­tion mar­kets.

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