The impact of Goods and Service Tax (GST) on Indian Logistics.

Goods and services tax popularly called GST is value added tax collected on all sorts of goods and services. The tax is to be implemented but the bill still remains pending on the same in the Lok Sabha. It aims to eliminate the need of all kinds of indirect taxes and would replace them. It shall be collected by both the central and state governments respectively. GST generally is levied within a bracket of 6 to 20% depending on the policies of each countries government. The concept of GST shall help in tax firmament and redistribution of the tax burden equally between manufacturers and servicing firms. In the logistics industry the advent of goods and service tax would present a huge opportunity. They may be able to revise their infrastructure and deliver logistics for spares and replacements. Since the tax structure in India is very complex, where the manufacturer pays taxes on taxes. Generally logistics companies try to avoid the multi tax scenario by making a stock transfer between stocking points and states. They set up warehouses in every state so that they do not pay taxes to both the centre and state. Saving taxes becomes the agenda of planning than the service and operating efficiency. Also with the tax structure affecting the operating efficiency of the warehouses, the response time to customer, distribution network, supply chain cost gets affected automatically. So we could understand that with the coming of the GST, the first most impact would be merging of smaller and smaller warehouses with each other and thus contributing to better efficiency. The productivity of the logistics department shall increase with the productivity of the warehouse. With a one tax only scenario, one does not have to think of multiple tax burdens and thus cost structures would improve as cost benefits would increase automatically. Companies will consolidate supplies and effective cost supply chains would be established. Another aspect could also be considered. With tax burdens the company would have to set up warehouses in numerous places. In

a country with 33 states, this might prove to be highly costly and thus some companies tend to cluster themselves around a part only. This may lead to various new firms coming up scattered across various parts of the country. The efficiency would decline if the competition becomes too stiff. With a more centralized tax system, the need for smaller firms and more warehouses gets reduced. With a new centralized tax system, businesses would have to plan their operations. The imposition of GST on the logistics sector shall help in catalyzing investments into information technology departments to avoid delays and inefficiency of work. It would create, in the long run, a common market permitting a free and unrestricted movement of goods and services across the country. In conclusion I would say, that coupled with state development of logistics and free trade warehousing, the GST plan can be conducive for healthy exchange of goods and services. Logistics divisions would receive incentives which would complement the supply chains of the customers.