The Modi government has decided to put an end to the country’s license-permit raj in road transport sector. With the help of GST, road transport connectivity will be seamless and speedier. “The (GST) Council has accepted the recommendations and now respective departments will implement them.” said a government official. The GST council has set up a task force to prepare a report on removal of state and national permits, all forms of checks, including road tax, pollution and fitness certificates. The task force submitted its report on Saturday. As per the report “with the abolition of value added tax and entry tax, there is no need for a permit system to restrict the movement of vehicles in a state… Hence, state permits, national permits can be abolished.”
The panel also mooted integration of e-way bill with regional transport data base giving all information about a vehicle, including fitness, pollution and permits. The ministry will make the fitment of Vehicle Tracking System devices using GPS technology mandatory on all goods transport vehicles. The ministry of road transport also brought proposal to show up e-license for drivers and e-vehicle registration to enforcement agencies which will mute the requirement to carry hard copy of these documents.
It has been almost a year since the historic midnight implementation of GST on July 1, 2017. Within the short span of one year, the turnaround time in road transport sector is down by 18-20 percent and many companies are on warehousing consolidation mode according to the rating agency ICRA. The companies are also interacting with supply chain management companies in redesigning the warehouse network to reap the benefits of the single taxation throughout the country. In the long term, it is expected that the truck turnaround time will reduce and, setting up of efficient warehouse network will improve the overall cost-efficiency.
Recently, the Ministry of Road Transport and Highways has increased official maximum load carrying capacity for new trucks and heavy commercial vehicles. It also scrapped the mandatory annual renewal of fitness certificates for freight carriers and changed it to bi-annual renewals. The newly proposed norms were much required because overloading was happening anyway and transporters were bribing the regulators on toll booths to get away with it. In intra-state transport, the policeman used to extract bribes from transporters for carrying excess capacity. Now the corruption and bribing will be phased out and transporters will be benefitted from this decision.
One of the main purposes to bring GST was to reduce the transportation time in transfer of goods between states. The end number of toll tax collection points in the states like Maharashtra and Kerala increased the transportation time. In the post GST period, the time wasted on toll tax collection points has been reduced significantly which resulted in turnaround time going down by 20 percent. The transport sector companies have to maintain warehouses in different states to take benefits of lower taxation in one state in comparison to other. Now, since the taxation is at single rate throughout the country, the companies could consolidate their warehouses because they have to pay same tax irrespective of the location of the warehouse.
