Will GST Help in Indian Economy by Saving at Check Posts?

The Goods & Services (GST) regime which rolled out from the Saturday midnight may be helpful to save around Rs. 2300 Cr. in check posts to help Indian economy which is lost every year because of truck delays on state borders.

According to a World Bank report in 2005, truck delays at state borders have been supposed to cost around Rs. 9 billion to Rs. 23 billion (from Rs. 900 Cr to Rs. 2300 Cr) every year in operating hours. However, it doesn’t include the “Facilitation Payments” made to circumvent several laws at the checkpoints and these have been supposed to range from Rs. 900 Cr. to Rs. 7200 Cr. Though such unofficial payments are not the direct loss to the Indian economy, they probably cause the losses of revenue or others to the economy and the government in excess of monies which are paid.

Under the GST regime, truck delays may become the matter of the past soon with various states like Andhra Pradesh, Karnataka, and Tamil Nadu have already removed the system of border check posts before July 1. Other states will follow the new rule soon.

Before GST, state check posts would collect taxes on goods in transit. When it comes to taxation, the check posts may go out. There are few other check posts like excise ones. The state excise on alcohol or liquor may remain.

States have sent the fresh advisories to ensure the goods are not stopped and the implementation of new rules. The states of Uttar Pradesh and Assam asked the officials to check the Identification Number along with consignment notes, invoice number, registration of logistic firm, and tax invoice till E-Way bill is effective. The government may implement E-Way bill under the GST tax regime over the next 6 months which would ease the truck movements further.

According to the draft Rules, the E-Way bill will be generated by the Goods & Service Tax network (GSTN) which will be valid till 15 days, according to the distance covered. It will be valid for 1 day to cover distance of 100 km and 15 days to cover distance for up to 1000 km. The officials can check the “E-Way Bill” anytime to avoid tax evasion during the transit. Companies would have to pre-register for E-way bill online for movement of goods up to Rs. 50000.

However, the industry needs to show the concerns on the rules. They said that the limit of Rs. 50000 was too low and timeline was removed from reality and impractical for completing the transport operation. According to them, e-way bill will be applicable for moving all types of goods without any difference between the goods.

The elimination of check posts would be a big relief for the truckers who would want to wait for hours in the queue for clearing the check posts, which is the main hurdle to move the goods in the nation.

The checkpoint systems in the government will consume several hours in unwanted waiting. According to the truckers, 15% to 25% of time in line haul was supposed to be lost in checkpoints. Along with the delays by normal factors in operation, such as congestion of traffic and need for vehicle maintenance and driver rest. Long distance trucks may face huge delays in India because of administrative activities in the government, such as sales tax collection.  The delays may take place either at road-side locations or fixed checkpoints established by the units of mobile enforcement.

GST is the most popular tax regime in India since 1947 and subsumes around the state taxes and dozen central which were charged on bringing country under the same tax system. Implemented by Modi government, the new tax regime will be working for around 15 years and add up to 2% to the GDP of the country.

Leave a Reply

Your email address will not be published. Required fields are marked *