Why GST Can Be a Game Changer for Logistics Industry in India


19 04 2017
GST and Logistics

The Goods and Service Tax (GST) is certainly giving sleepless nights across the logistics industry in India. While the bill has been recently passed in the Rajya Sabha, there is still confusion over its implementation and rates. However, Mr. Arun Jaitley, the minister of finance, defence and corporate affairs in India, has made it crystal-clear that GST will be rolled out from July 1, 2017; there are some doubts or confusion over the rates. Some of the industry experts are of the view that it could be less or more than 18%.

The Logistics Performance Index (LPI) report called, ‘Connecting to Complete 2016’, presented by the World Bank has some good news for India logistics market. The ranking of the logistics sector in the country has increased to 35 in 2016 from 54 in 2014. However, the big question still remains unanswered. Will this growing development in the industry hindered by the new GST bill?

As per the latest news from the finance minister, the slabs of GST taxes have been fixed at 0%, 5%, 12%, 18% and 28% on various goods and services. The industry experts in the logistics sector are very optimistic and feel that this new tax slab will boost the growth and people can expect to experience high quality services.

Mukesh Singh, founder and Chairman of Logisticmart.com, a leading online aggregator of professional logistics service providers, said, “GST will definitely redefine the economy of India. It will eradicate the need of paying plenty of taxes currently charged. It will create a unified market that will ultimately lead to the smooth transportation of goods across states.”

Prominent Benefits of GST in Logistics Sector

The GST will revolutionize India’s logistics market by providing some exceptional benefits both to the service providers and the customers.

Payment of Uniform Tax

Mr. Singh is right in his view because in the current tax structure, there are various forms of taxes like the Octroi tax, Value Added Tax (VAT), service tax at the checkpoint of various states for the seamless movement of goods. The main problem here is that different states do not have a uniform tax structure. They impose different rates and the service providers as well the customers have no choice but to pay the taxes. However, the GST is going to end all these problems as the customers will be required to pay a single tax in whichever state or city, they are transporting goods. That’s not all as they can also expect to get better services from the logistics companies at a lower cost.

End of Long Waiting Hours at Checkpoints and Timely Goods Delivery

Another positive thing for the customers is with the implementation of the GST, they can look forward to get timely delivery of goods. A large of people in India, prefer to move their goods through road and queuing time at  the various tax collection points at state borders ultimately  leads to delay  in transit time. It not only affects the operations but also increases goods transportation cost.  Once , the GST will be in place from July 2017, the trucks carrying goods, will be able move hassle free across states and all the problems like long waiting hours at  checkpoints, late delivery and high transportation cost will be a thing of the  past.

A New Era of Growth Beckons Logistics Industry

Finally, it can be quite rightly said with the launch of GST in July and it will totally change the way logistics industry functions in India. It will truly prove to a game changer tax structure that will increase competitiveness among the service providers as they will strive to achieve or match international standards and most importantly grow their business.


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