The Impact of GST on Logistics Operations

  • July 18, 2017
  • Blog

The Goods and Services Tax that has been proposed is certainly going to unify the country into a single market. Thereafter, it will convert it into a single tax regime rather than the present multiple tax regime. This will have a positive effect on the logistics industries apart from the various industries which will benefit when the GST is in operation. The entire scenario of transportation will change after GST has been introduced.

At present, the good pass through different levels of taxation at various stages of the supply chain. This implies that the goods will be subjected to various levels of taxation. This layered taxation system might prove to be obstacles in the smooth flow of good across the country. However, with the introduction of GST, these hindrances will cease to exist.

Warehouse Consolidation

In the present day scenario, the organizations have spread their operations across the length and breadth of the country. Thus, they have to operate warehouses that are located at various locations. The reason is that each state charge separate sales tax and the goods are transferred from one state to another with the help of the inter-state scale. This is used for tax redemption. Nonetheless, with the implementation of GST, the whole country will come under a single unified tax regime.

Thus, there will be no need to seek an exemption from the dual tax. It will lead to the consolidation of the warehouse by the organization since they will be able to operate with a lesser number of warehouses which have a centralized location. In order to save on the cost, the manufacturing companies can get rid of the warehouses in low-revenue states.

Smooth Transportation of Goods across States

With the implementation of GST, multiple checkpoints will be installed in different locations in a state, particularly in the borders, for checking tax-compliance. This will help in improving the transit time since no time will be consumed in scrutinizing the material and filling the documents. A unified market that will be created with the help of GST will facilitate the smoother and faster flow of goods across the country.

End of Extensive Confusion and Paperwork

Presently, the cargo delivery department delays the fulfillment of documentation since it involves complicated tax provisions and various slabs for different kinds of goods. GST will have a unified set of tax which, in turn, will have fewer compartments and slabs. Thus, you will have to spend less amount of time on the paperwork. This implies a faster turnaround time for the transportation service.

Small Supply Chains

Interstate regulations are pretty complicated and this is the reason companies have to operate through scattered and smaller warehouses in different states. As a result, it increases the length of the supply chain. With GST in function, there will be a consolidation warehouse. This will reduce the time lost in transporting goods from one warehouse to another. Shorter supply chain means you have to spend lesser time on unnecessary activities such as material scrutiny at the checkpoint, paperwork, and compliance with the uncountable supply chain. This will make the work smoother for smarter companies.

20Cube Logistics is a new age logistics company and have staffs having good knowledge of GST and its implications.
GST is considered to be the single biggest change in logistics management since the Independence of India. It is indispensable that all the warehouse and logistics companies gear up for a positive impact.