Jun 10,2022 | 7 min read

GST issues in Logistics | Lawyered's take

Introduction:

Logistics is a major contributor to India’s economic growth. It contributes in creating a backbone of manufacturing and trading activities in the economy. Logistics play a critical role in developing countries like India where there is high consumption and the demand is growing.  

Activities in the Logistics Industry involve loading, unloading, supply, packaging, warehousing and transportation. Well till now the logistics players in order to avoid the levy of CST and state entry tax, have been maintaining multiple warehouses across states. With the introduction of the new tax regime i.e. GST, it has reduced the transportation cycle times, enhanced supply chain and turnaround time, which has led to the consolidation of the warehouses.  With the removal of the inter-state check post, the transportation has become much easier, thereby improving the efficiency. The logistics industry can be divided into two different parts i.e. Transportation through roads and through maritime shipping. Both of them were impacted by the GST regime. This article will discuss in brief the new tax regime(GST) that was introduced five years back and its implications upon the logistics industry.  

  1. The transportation of the goods from one place to another has become easier and also there is reduction in the transportation

  2. No need to have warehouses in every state as now there is no different tax regime in different states, thereby making inventory management easy and superior.

  3. The bringing of the E-way bill supported by the National Information Center (NIC) into the economy has streamlined the documentation process and made all the transactions easier.

  4. The corruption in the logistics department has reduced drastically since now there is no interstate tax to be paid and with the introduction of technology, the process has become transparent.

GST on Transportation: 

During pre GST scenario, the transport services were handled by the GTA (Goods Transport Agent) and the service tax for the transport services rendered were paid under the RCM( Reverse Charge Mechanism) which means the tax was paid by the service receiver and an abatement of 60-70% was allowed depending upon the type of good.  

Under GST Regime the transporter GTA can charge 5/12% GST based on following conditions- (As per Notification No. 20/2017- Central tax dated 8th August, 2017)

  • If GST is charged @ 5% the no Input Tax Credit shall be available to such GTA and RCM shall apply.

  • If GTA charges @ 12% then ITC on such services can be availed and no RCM shall apply. 

 

Conclusion:

The new tax regime i.e. GST has much more to offer to its stakeholders, logistics operators, e-commerce players and end consumers  as we go further. Although it has not been concrete in terms of compliance, but once the proper implementation of this tax regime begins, it won’t be unfair to say that GST will disrupt the existing ecosystem and will make it more efficient and competitive going forward.

Lawyered has successfully launched, On Road Legal Assistance service i.e. Lawyer on the Spot(LoTS) which has brought about a change in the Logistics Industry by resolving the problems faced by the department. It provides quick solutions for issues such as Unlawful Detention, FIR, E-waybill, GST and many others by providing Pan India Service, On Spot Legal Support and 24*& call availability,legal awareness and guidance for travel, automated notification/ reminders for the enrolled vehicles, personalized vehicle assistant, instant on-the-spot legal representation by a local/nearby lawyer and many others. AITWA  (All India Transporters Welfare Association) and ‘Lawyer on-the-Spot’ (LotS), both work together for the welfare of the Road Transport Fraternity. To know more about LOTS, you can visit our website or call us at +91 7669449669. 

 

Keywords:

 

Logistics, loading, unloading, supply, packaging, warehousing, transportation, GST, GTA, e-commerce, stakeholders, e-way bill, documentation, National Information Center (NIC).


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Team Lawyered

Lawyered is a legal tech initiative designed to change the way people interact with and within the legal industry. We believe that access to critical services like legal should be just a click away. Our team is working to bring legal online, making it cost effective, high quality and accessible for all.

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