GST in transportation: Experts want check posts, excessive documentation to go

To attain full benefit of uniform GST in transportation, the country must eliminate check posts and excessive documentation over the long run, say experts.

According to SP Singh, Senior fellow and Coordinator of the Delhi-based Indian Foundation of Transport Research and Training (IFTRT), if the input tax credits on purchase of vehicles, tyres, insurance cover are taken into account, freight cost is expected to drop by 4-10 per cent.

Freight cost apart, what GST would bring about is formalisation of a business that largely operates in an unorganised manner leading to serious tax leakages. This is now set to change.

Large transporters would now take the lead to get their vendors, including smaller transporters, register under GST, thereby helping plug tax leakages and better cost realisation across the value chain.

Pritam Banerjee, senior director for Corporate Public Policy, South Asia region, Deutsche Post DHL Group, confirms the gains from GST. But he says to get the full benefit of the ensuing tax reforms, procedural aspects must be streamlined.

Check-posts and excessive documentation do not go with the spirit of GST.

“Full fungibility of input tax credit paid on transport would bring some immediate gains, but significant efficiency and cost benefits in transport would only come with the elimination of check posts and excessive documentation over the long run,” Banerjee told BusinessLine .

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