ADVANTAGES OF GST TO LOGISTIC COMPANIES

COST / TIME SAVING:

Bigger warehouses and end market driven logistics planning is likely to result in meaningful costs
savings over time. On account of entry taxes and heavy paper work at state check posts, there is an
additional 5-7 hours added to the transit time for inter-state transport of goods. Abolishment of entry
tax and easier tax compliance procedures is likely result in easier movement of goods across the
country.

FORWARD INTEGRATION :

As these companies gather scale, that will enable them to offer services at lower costs. As a result,
companies for whom transportation is not a core part of their business will increasingly outsource
their logistics operations to third party logistics (3PL) and fourth party logistics (4PL) service
providers.

SINGLE RATE:

Standard tax rates will allow corporations to move away from the practice of building a warehouse in
different states to adhere to each state’s tax code. A big packaged consumer goods company could
thus make do with one large mother warehouse at critical points in the country and employ logistics
companies to manage distribution and supply chains

 Bringing in transparency in logistics activities, thereby reducing overall

corruption – By eliminating the roots of parallel economy (and resultantly, black
money), the GST move is expected to act as a formidable deterrent to across-the-
border corruption and monopoly of local booking agents, by allowing broader scope
for fair play which benefits all parties involved – businesses, consumers, states and
the Centre.

Overhaul of the Supply Chain Management via consolidation of warehouses – A

lesser discussed effect of the GST, and yet, the logistics industry would stand nowhere
without organized, robust warehouses. With the implementation of the reformed tax
structure, sweeping changes are expected to seep through this segment, with companies
vying for overall operational efficiency than mere tax efficiency. With GST having rolled
out, companies will now find the global hub-and-spoke model for freight movement much
more feasible. This means fewer warehouse centres in strategic locations instead of
smaller ones scattered in each and every state; in turn, leading to less time wasted at
multiple points, less paperwork and faster movement of goods