“With tax rates, finally in place for most goods and services, it is now known what gets cheaper and which items get dearer in the GST era. Freight charges are expected to come down by four to 10 per cent following the imposition of a uniform five per cent GST rate for goods transport in all modes, and the input tax credit benefit for transporters, third-party logistics firms, common carriers, packers and movers and freight forwarders. However, there is a larger worry; uncertainty about the extent to which GST will impact the supply chain ecosystem and, eventually, customers still prevails. The answer to this lies in the transition rules, which are yet to get a green signal,” informs Piyush Kumar, CEO, Indus B2B Solutions.
Apart from that, E-way bills rules; a key for the transport and logistics sector are also yet to be decided. These rules deal with the registration of goods worth more than Rs 50,000 when moved within the state or outside it. As far as the delay in E-way bills rules is concerned, the debate prevails over whether these rules should be applicable for products which are not under the GST ambit such as alcohol and petrol. Meanwhile, rules relating to input credit, refund, invoice and registration, among others, have been finalised and provide much-needed clarity on many aspects of GST. At present, the retail goods booking and delivery service providers (goods agents) levy a service tax on gross freight charges displayed on consignment note at 4.75 per cent. Freight cost is expected to drop by over four per cent with implementation of goods GST. However, in the case of contract transport business and door delivery transport services provided by logistics firms, the current service tax stands at its peak rate of 15 per cent. In this case, the service tax under the new GST regime, after adjusting input tax credit, will lower the effective service tax on gross freight by 10-12 per cent, at a conservative estimate.