Goods and Services Tax will Result in Logistics Cost Cut
The research division of rating agency Crisil Ltd expects the roll-out of goods and services tax (GST) to reduce logistics costs of companies producing non-bulk goods by as much as 20%.
An inefficient logistics network created using smaller warehouses to save on state taxes has resulted in higher costs and increased inventory levels, it noted.
“It is anticipated that GST will result in consolidation of warehousing alongside facilitating seamless inter-state flow of goods. GST is also, these costs stand at 6-8 per cent of the value of goods.
In a direct cost comparison with China, India’s average cost to export or import one container is around 72 per cent higher, in higher transit time. The overall tax on the supply of indigenous goods is around 29.37 per cent.
“With the implementation of GST, the Revenue Neutral Rate will be much lower than the present tax rates on goods.
This will lead to a lower tax burden for consumers, thereby facilitating a consumption-led growth,” it said.