GST Impact Economy and its Effect on Indian Transportation Industry

gst impact indian economy effect transport logistic industry
gst impact indian economy effect transport logistic industry
gst impact indian economy effect transport and logistics Industry

Transportation is associated with shifting of goods, passengers, etc  from one place to another using different modes like roadways, railways, airways or through water. Transportation is an activity which connects different business with suppliers and customers. Transportation has an major impact on Indian economy.

After GST was introduced it had an positive impact in the transport sector. It has helped to ease the movement of consignment, goods via roads, rails, air and sea. 20% increase in transport efficiency was noted due to the dismantling of various checkpoints. The e-way bill has also helped drivers as it reduced the burden of enduring the procedures at various checkpoints.

The Planned GST system has replaced several state and federal tariffs for a single tax. Previous complicated tax structure in India referred that logistics decision, choice of setting up warehouses and distribution center , were taken on the basis of tax regime which included central sales tax and state value added tax rates.

GST unleashed an new era of developing logistics infrastructure, taking investments to new level and transportation. Transport vehicles used to waste about five to seven hours daily at interstate checkpoints. As per the estimation by World Bank, simply having delays due to roadblocks, tolls and other stoppages could cut freight times by 20% – 30% and cost logistics by 30% – 40%.

Table of Contents Page

Impact of GST on Transportation Industry :


As per the GST Law 2017, services by way of transportation of goods by road is not kept under GST so no GST tax is payable on it. GST will only payable on services of Goods Transportation Agency ( GTA ).

Goods Transportation Companies :-

GTA is any person of firm who is providing service in relation to transport of goods by road and issues ‘Consignment Notes’. If the service provider does not provide consignment note the transport of goods by road won’t be taxable. Services of GTA in transporting goods will account for GST at 5% or 12%. In 5% GST you cannot take the credit of input tax charged on goods or services. Any service provided by GTA to an unregistered person including an ‘unregistered casual taxable person’ will be considered Nil except following recipients :

The following are considered to be service recipients :-

  • Factories registered under Factories Act, 1948
  • Society Registered under Society Registration Act, 1860
  • Person registered under CGST Act, SGST Act, IGST Act, or UTGST Act
  • Established Corporate Body
  • Any registered or unregistered partnership firm

Government has also kept some GTA Services out of the GST Act. Below is the list of some such services :

  • Agricultural Produce
  • Flour, pulses, rice ,milk, salt and other food grains
  • Organic Manure
  • Registered Newspapers or Magazines
  • Relief materials going for victims of natural or man-made disasters
  • Defence Equipments

Rates of GST on Different Modes of Transportation India :

Roadways GST Rate :- (surface road transportation service)

Road transportation goods are subjected to 5% or 12% GST tax with credit availability to input tax.

Airways GST Rate :- (Aviation Industry GST)

Good transport is taxed at 18% for within India and out of India with credit availability to input tax.

Railways GST Rate :- (Rail Train Transportation Industry)

Goods transportation through Indian Railways are subjected to 5% tax with credit availability and this  makes a strong competition between road and rail transport. For transportation of goods other than Indian Railways tax is charged at 12% with credit availability.

Waterways GST Rate :- (Water Transportation Industry)

Waterways transportation is charged at 5% with credit availability.      

gst impact indian economy effect transport and logistics Industry

Benefits of GST on Indian Goods Transport Services :

Simplified Tax in GST :-

The implementation of GST removed various taxes and tariffs of each state. This reduced the complexity which was faced in transportation of goods before GST. Before transporters had to pay different tax in every state. All these tax rates were different. GST brought out “ONE TAX ONE SOLUTION” system.

Reduction Warehouse cost in GST :-

The previous tax system used to collect higher logistics cost. It was reduced to about 20% after the implementation of GST. As each state used to have different tax rates, companies used to own warehouses in each state instead of at one place which also increased warehouses costs. After implementation of GST companies don’t need to get warehouses in different state and this improved logistics.

Increase Efficiency in GST:-

One tax one solution has made transportation seamless throughout the country with the removal of multiple checkpoints, entry permits, extra paper works, etc. After GST all the complexities in transport sector in various states are removed. These saves transportation time, operating costs and efficient logistics.

Driven  By Technology in GST :-

GST has entail  a new set of compliance requirements and to fulfil this companies will require to adopt new ERP accounting systems and stock management systems. The industry is now able to avail tax credits for all its good, goods vehicles, delivery vans or packing machinery. The introduction of e-way bill has helped the firms in the industry to sort out the confusion by maintaining uniformity in the industry.

Reduced Paperwork and Consolidation in GST :-

Under GST lot of taxes like entry tax, OCTROI has been removed. Removal of this kind of taxes had ease the paperwork procedure for the logistics service providers.

Disadvantages of GST :-

  • Some experts says that GST is nothing new but it is just a new name given to the previous tax system.
  • The service tax was 15% previously but now it has become 18%. Due to this many services have become costlier with telecom, airline, and banking affected mainly.
  • This new GST Act has given the control of business to state and central governments. The business owners are now more confused about the system as they are facing issues to understand the rules identified.
  • After implementing GST government collected a large amount of money through taxes in its first few instances. Businesses had to let go large amount of tax . Several businessmen complained about not getting the credit of input tax. Officials found some mismatch of data and they denied the credit of input tax to many. As a result many had chaos with the officials and are not happy with the GST.
  • This GST Act had not been so fair with the disabled people. Many things that were tax free earlier for disabled people had now been included under GST tax. Before implementation of GST brail paper, hearing aid and motorized wheelchair were tax free but now this things are also being taxed.
  • Government has not spared banking systems also. At one side they are trying to give push to banking services and insurance in India and on other side government taxed banking and insurance services at higher rates when compared to previous rates.
  • Implementation of GST also had an negative impact on discount and rewards program. Before GST product was taxed on post-discount rates but now the products are taxed on pre-discount rates. Many companies have suspended their rewards program.
  • As the government chose the mid year for launch of GST this lead to problems in taxation and reporting during the end of the financial year. For good reason government should have launched GST at the end of the financial year it would have avoided the confusion during taxation and reporting.
  • As per the GST rules sellers need to get registered in every state he is doing business and this has increased more burden and complexity for seller. The government should have thought of a centralised registration procedure to ease the work sellers during the rollout.
  • GST offered return tax benefits to other business but only transport sector has been kept deprived of it. Though transport sector plays an important role in the economy of country it has been kept away from return tax benefit.
  • Most of the check posts were deactivated after the implementation of GST. Before GST transport vehicles were checked at every check posts. This was time consuming and also the officials at check posts used to harass drivers and fine money for no valid reason. After deactivating check posts there was decrease in corruption, transportation cost and time. But now this check posts have started again and the situation have become as it was before.
  • Complexities in the structure and implementation GST is preventing local firms from investing in the market. Also government gives more free environment to the foreign investors in tax and rules. These partiality with our own business sectors is not at all valid.

GST impact in indian economy effect transportation Industry Conclusion :-

Government is keeping more trust on the foreign investors while ignoring small and local investors. If government shows a firm belief in local investors India could achieved heights. That’s the difference between India and China. China firmly linked its business sector with country and now we can see its result. China is among the fastest growing economy and they are doing well with their own made products in the entire world. In India every state, every region, every politicians keeps their own profit ahead and works according to that. If this continues in India, India will soon see its worst phase.

No doubt many sectors have been doing good after implementation of GST but still there needs some improvement in implementing GST. Partiality between local and foreign investors should be vanished. Rules should be same for every businessmen and then only we can see a fair competition.

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gst impact in indian economy
gst impact in indian economy
gst impact indian
gst impact indian
GST impact indian economy effect transport and logistics Industry
GST impact indian economy effect transport and logistics Industry
GST impact indian economy effect transport and logistics Industry

What effect does industry or industrialization have in common public life ?

The industrialization has a major impact on society and people have to look forward to some changes in the country. Based on the public interest in the industry, profits and employment go higher. It increased in urbanization and people moved to an urban center in search development. On-road transportation, certain development has been establishing towards society help. Economic developments also have taken in the industrial revolution. It brought up significant social changes among public interest on industrialization. Revolution has brought up to consider significant changes in road transport on industry sides. Workers get paid and take advantages in mass production of goods.

What and how many bad business impact of poor transportation service?

Due to poor transportation services, many businesses greatly affected. Shifting goods to consume place affected due to poor road transportation. It involves a huge number of things to keep in mind and production will below. For controlling this situation, poor transportation needs to overcome as quickly as possible. It increases sufficient roads in rural areas tend to increase production. For agriculture input and markets, road transportation is a must. So, poor transportation must solve by taking proper measurements. Especially in rural areas, transportation is important to carry out many things smoothly. So, the government has to take proper steps to avoid this misconception and do the best for promoting road transportation.

What is the Government of India policy best suited for doing business?

Recently, the Indian government led by Narendra Modi is focusing more on a broad world of an endless number of emerging startups. For achieving this, the Indian government is creating new opportunities and programs. They help companies in both nurturing and innovation. There are many initiatives taken by the Indian government to support new entrepreneurship. It also aims to foster the civilization of creativity among Indian youngsters. With an exceptional and huge statistic benefit, India can raise and improve business individually and make the occupations for the benefit of this nation and also the world. Every step is taken to enable the prosperity and growth of the country.

What do companies in India have problems with multi-state trade payable Geographical diversity?

Ethnic, cultural, racial, gender and other kinds of identities determine how people know, see and experience the world. Individuals from diverse environments think, react and learn differently. It is difficult for multistate business companies in India while trying to understand their employees. Most significantly, geographic diversity will lead to a lack of unity within the organization. If properly harnessed, geographic diversity can provide in holistic and multi-dimensional perspective to the acumen and wisdom within the multistate business companies. The companies in India do not have more problems with the multi-state trade payable Geographical diversity. It is because the process is a little bit simple.

What is there an efficient goods commercial vehicle available in India as expected?

Transition in India become more realistic with the current government has sustained and massive push on electric mobility. The government’s think-tank – NITI Aayog has been spearheading transition for increasing the zero-emission mode of transportation. Multi-Axle Trucks (MATs) are considered as the efficient goods commercial vehicle available in India and widely used with for industrial transportation. These vehicles mainly range from 26.2 ton to 49-ton vehicles gross weight. Sales of these vehicles have been jumped between 2009 and 2010 as 55% higher. Goods commercial vehicle has been massively improved on the highest standard level 60% of the overall commercial vehicle market have been massively improved.

What is heavy haulage Oversize ODC transportation a simple task in India?

ODC, otherwise called over-dimensional cargo is added entirely outside of a deck of the vehicles for shifting the over-sized goods. Both the length and height of cargo are larger than the standard vehicles. These heavy cargos are used in both domestic and commercial sectors. ODC transport in India can help people to shift their heavy goods from one location to the next one quickly. It is because these vehicles are well-equipped with many modern devices. They are capable of transporting heavyweight goods over long distances. The transport service provider has sufficient experience in this sector, so the team makes the overall transportation process hassle-free.

What is the diversity in logistics or transportation costs in India?

The Indian transportation sector is very large and diverse. It has been carrying out a major solution to undergo road transportation. For shifting goods and products, road transportation is very must and involves good actions. It has lots of results and the majority of imports rely on on-road transportation. Also, the costs of transportation in India are affordable and depend on business size. It works from the publication that makes the average population time for transport needs. So, get it based on the diversity in logistics and transportation costs is limited to the business sectors.

What is the level of customers class in the development of Indian Industrial Market?

Customer segmentation is nothing but a practice of dividing a customer into a group. It has been carrying out with the majority of things relevant to marketing. Thus, it plays an important role in meeting overall interests and spending habits. So, it termed to evaluate the specific ways organize with marketing needs. Millions of Indian population has the biggest range of the base class. It is also considered high due to Indian market range. It involves middle class, richest, and below-average base class. It has overflowing wealth value and sometimes involves in extremely poor condition. Checking the database also reveals the big Indian base class.

What and how much contribution of the present government has been successful in promoting Indian trade business ?

Industry experts mainly state that Government requires to endure the stepping on spending more on the particular sectors. With the Current Government is concentrating on various factors such as education, infrastructure, healthcare, connectivity and more. All these are major aspects that revive the growth with declining economic growth. There are hundreds of entrepreneurs as well as start-ups in the manufacturing sectors have been improved with the economy. Government has initiated certain measures for reviving the economy with spurring growth. India responds to the need for manufacturing as well as other service sectors then 80% of the GDP gets to improve.

What are the major business problems in India?

Since the time immemorial Indians have been promoting peace. The business has massively improved to the peak level but there are also some problems that most of the business faces. Whether it is related to government, crimes by ‘godmen’, condition of roads, corruption, or any others, the business gets affected in certain circumstances. Corruption is the worst endemic that is widely spread in India so it is important to be handled wisely and quickly. Though our country needs several changes at present below are some of the important things that we need to consider for tackling immediately. · Corruption · Illiteracy · Education system · Basic Hygiene · Healthcare system · Poverty · Pollution · Women’s safety · Infrastructure

What are the disadvantages of the transportation business ?

Here are the demerits of the transportation business as follow: Frequent Accidents Road transportation in India is risky. Necessary security measures never made against road accidents. Inadequate Road Many roads in India are inadequate and also available in bad shape. There are just 34 km long roads per every 100 area. Heavy Taxes It is another disadvantage of the road transportation business. The tax burden per vehicle in this country is Rs. 3500. Poor road maintenance Roads in India are not properly maintained. There is only 0.1% of national earning is invested in road maintenance in India. Rising diesel and petrol cost The operational amount of road transport is rising continuously. Not suitable for bulky goods It is unsuitable for heavy goods.

What are the advantages of the transportation service business ?

The road transportation involves a majority of things to help workers, students, and people to travel securely. It involves less cost and safety for everyone. Other than that, it easily delivers enough goods on time via road transport. It is more applicable for business to carry out major benefits in road transport. Goods and products delivered at the right location within the limited time duration. It involves lots of flexibility in operation and cheaper as well. For import and export business, road transportation is must and more appropriate for a short distance or long distance. It deserves the right platform to carry out major goods delivered at the right time.

How many types of transportation are used in India?

With the rapid urbanization in India, the Economic growth of the country has also improved. Transport system mainly has been improved into distinct modes such as notably road transport, railways, inland water transport, airports, and airlines, coastal shipping and many more. Roadways are the dominant means of transporting carrying about 85% of the total traffic generated in the country. India has about 191.7 million registered vehicles and Compound Annual Growth Rate from total Registered Motor Vehicles in India has been improved to 94%. With the increase in the number of vehicles on roads, it also paves a way for the development of business.

What is Logistic and what works ?

Logistics is broadly used to refer to a process of moving resources including equipment, products, materials, and inventory from one place to next one at the targeted destination. This term is used in numerous applications. There are different kinds of logistics services available but road transportation gets more fame among business professionals. It is because if business products or material cannot reach the customers, it will fail. It is the right place when road transportation plays a vital role. It also impacts many other aspects of businesses. If the products are shipping to your customers on time, it will increase the profitability of a company.

What are the meaning and use of a company or industry in reality ?

Company or industry, in reality, is an entity that especially engages the business. The company could be structured across many numbers of ways. A company could be a corporation, sole proprietorship or under the partnership. Based on the different company that you are dealing with, it could be owned by a single person or even a group of individuals. The company could be well structured under many circumstances. Liability is an important type of company that is especially assumed. Company or industry in India has a major growth with the improvements in modern technology and transportation facilities all over the country.