Transport industry has always been a difficult and grey area for taxation from govt’s perspective. Due to difficulty in levy and collection of S.Tax on transport industry, govt shifted the burden of tax on industry (service receiver) under reverse charge mechanism and provided exemption to passengers along a few. These are apart ssi exemption.
Given the above background, we need to wait for the new provisions, exemption if any, relating to transport industry in order to exact assessment of gst impact on it.
In general, transportation now will be costly as gst is being raised to 18 percent from present tax of 15 percent.
Since gst is an indirect tax, ultimately tax burden will be passed by the industry to consumers and hence its impact will be shifted. Here due to higher cost to consumer, a little impact on this industry may be seen during transition period and will stabilize thereafter.
Petroleum products are out of gst. Therefore, there will be no loss or profit on this count.
Yes transport industry will get benefit on purchase of vehicles as automobiles may be cheaper due to lower gst tax.
There will two big positive impacts for transportation industry if successfully implemented. Following are few main points I can think of.
- Logistics cost will come down and efficiency will increase for transport within India & exports
- Vehicles cost will come down. Currently overall tax for each vehicle is at least 27%. If they come to 18%, it will be a huge benefit for new vehicle purchasing
- As petrol/diesel are not part of GST, so there will no impact on fuel side.
- Cost of tickets will increase for travelers as service cost is going to be higher than existing tax.
But overall, I will say it will have positive impact on transport industry
Transportation industry is going to get a boost from GST implementation as they will do away from the checkposts practice.
However i am of the opinion GST on transport industry is going to be charged on reverse charge mechanism. We will have to wait and watch till the final law comes in public domain.
Today 60% of transport/travel time is spent idle at Checkposts, with GST this will be eliminated hence savings and better productivity.