GST can save up to Rs 2300 crores on check post of Indian economy

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The GST (Goods and Services) regime that kicked in from the midnight of Friday and Saturday may help the Indian economy save up to Rs 2300 crore in transportation which they lost annually due to truck delays at state check posts

“Truck delays at checkpoints have been estimated to cost the economy anywhere between Rs 9 billion and Rs 23 billion (Rs 900 crore- Rs 2300 crore) a year in lost truck operating hours,” according to a 2005 World Bank report. The estimate, however, does not include ‘Facilitation Payments’ made at the checkpoints to circumvent various regulations, and these have been estimated to range between Rs 900 crore- 7200 crore. While these unofficial payments, being transfers, are not directly a loss to the economy, they probably result in revenue and other losses, to the government and the economy, far in excess of the monies actually paid, the study pointed out.

However, under the GST era, delays at check posts may soon become a thing of the past with several states including Karnataka, Andhra Pradesh and Tamil Nadu already having done away with border check posts post July 1. In all 22 states, including West Bengal, Delhi and Maharashtra have removed check posts after GST rollout. According to the finance ministry, 8 states, including Assam, Punjab, Himachal Pradesh, and some north-eastern states, are also in the process of abolishing check posts

State check posts in the pre-GST era would collect taxes on movement of goods. “As far as taxation is concerned, the check posts will go. There are couple of other check posts like the state excise check posts. State excise is the state duty on liquor/alcohol, now these things may remain,” Revenue Secretary Hasmukh Adhia said.

States have sent out fresh advisories to field officers to ensure that goods are not held up and the new rules are implemented. Assam and Uttar Pradesh have asked its officials to check the GST Identification Number, along with the invoice number, consignment notes, tax invoice and registration of the logistic firm till E-Way Bill comes into effect. The government is expected to implement E-Way Bill under the GST regime, in the next six months, which would further ease movement for trucks.

Read this story in Gujarati
As per the draft rules, GSTN (Goods and Services Tax network) would generate E-Way Bills that will be valid for 1-15 days, depending on the distance to be travelled — one day for 100 km and 15 days for more than 1,000 km transit. The tax officials can inspect the ‘E-Way Bill’ anytime during the transit to check tax evasion. For E-Way Bill, companies would be required to pre-register online for movement of good above Rs 50,000.

The industry, however, has expressed concerns over the rules, saying that the Rs 50,000 limit was too low and that the timeline for completion of transport operation was “impractical and removed from reality”. They also felt that the E-Way Bill would be applicable to the movement of all kinds of goods without making any distinction between goods that were evasion prone or not.

The abolition of check posts would come as a huge relief for truckers who would earlier have to wait in queue for hours to clear the check posts — the biggest hurdle to movement of goods within the country.

“The government checkpoint systems consume line-haul hours in unproductive waiting. Truckers reported that 15 per cent-25 per cent of line-haul time was lost at checkpoints, although other estimates were as low as 4 per cent…In addition to the delays caused by normal operational factors such as traffic congestion and the need for driver rest and vehicle maintenance, long distance trucks in India experience significant delays due to governmental administrative activities, such as control of sales tax collection. These delays can occur either at fixed checkpoints or at road-side locations set up by mobile enforcement units,” the World Bank report had stated.

GST is India’s most ambitious tax reform since its independence in 1947 and subsumes over a dozen central and state taxes that were levied on goods and services bringing India under a uniform tax regime. The new tax regime implemented by the Narendra Modi government which has been in the works for over 15 years is expected to add 2 per cent to the country’s GDP (gross domestic product).

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