GST leads to lower inventory cost: Apollo International

Commenting on the recent announcement of GST Bill, Raaja Kanwar, Managing Director & Vice Chairman, Apollo International, says, “Currently, each of India’s 29 states taxes goods that move across their borders at different rates. Apart from that, Corporate State tax of two per cent is levied for inter-state goods transfer. We believe that uniform taxation covering rail transport, air transport and road transport under five per cent slab according to the new GST Bill will lower the interstate tax burden. It will also ensure major consolidation in the industry. We expect an improvement in the logistics time-frame after phasing out the border check-posts resulting in greater operational efficiency thanks to faster, increased number of deliveries, along with reduction in logistics cost during transit.”
“Currently, the existing interstate taxation system has forced companies to create and maintain warehouses in each state. There are around 20-30 warehouses per company, one in every state, in addition to this, there are 20-30 carry & forwarding agents per state, making the supply chain longer and inefficient. GST tax will be levied on transportation of goods and full credit will be available on interstate transactions. We are expecting a decrease by 1.5-2 per cent in logistics costs account of optimisation of warehouses, leading to lower inventory costs which are set up across states to avoid paying two per cent corporate sales tax and phasing out of interstate sales tax,” he adds.