Budget 2018: Govt must help logistics companies to reduce cost, turnaround time

The cost of logistics in our country at 13 per cent of GDP is higher than 9 to 10 per cent in developed nations. One of the major factors for this is high turnaround time for goods at different points.

By Pirojshaw Sarkari  
Saturday, January 27, 2018

The cost of logistics in our country at 13 per cent of GDP is higher than 9 to 10 per cent in developed nations. One of the major factors for this is high turnaround time for goods at different points. The need of the hour is to reduce these costs and bring down the turnaround time. In order to achieve this, the government must come ahead with the following measures:

For 3PL Companies

1. Currently, the Transportation Revenue is subject to TDS at 2 per cent. This puts huge pressure on cash flow as TDS today is far more than tax liability. Though there is a provision for reduced rate of tax, it takes lot of time and administrative burden asking for it. Every year, 3PL companies like Mahindra Logistics files its ROI with huge tax refund eligibility.

2. As per current provisions, there is an option for a transporter to either pay GST under Reverse Charge Mechanism (RCM) under which ultimate recipient of services pay the applicable GST, or under Forward Charge Mechanism (FCM). Using FCM would be an advantage for the service provider (as it entitles it to claim the input tax credit for all the inputs), but it requires that if it is adopted, it needs to be adopted for all its customers. This need to be made customer specific, as it is not necessary for all customer to agree/not agree for FCM. This puts lot of difficulties for a transporter to align with its customers.

3. Proposed implementation of e-way bills need to have compulsory closing mechanism from the consignee on delivery of goods at the destination. This will do away with the requirement of paper acknowledgment of delivery of goods and will reduce huge administrative burden of the transport service providers.

4. Facilitate Integrated Logistics and Manufacturing Zones (ILMZs) that combine railway, road and port infrastructure made available along with the manufacturing set-up.

For corporate India as a whole

In terms of requirement under the regulations, companies should account for the ESOP cost as part of its manpower cost. Tax provisions can be aligned to this requirement which makes such accounting charge as tax deductible. Currently under the relevant regulations, companies need to spend certain percentage of profits on CSR initiatives - this is a very good measure - but can this CSR expenses be made tax deductible?

This will help products and services that are made in India to move in India, much better.

(The writer is CEO, Mahindra Logistics)

Latest Stories

Sugar stocks fall as CCI imposes Rs 38 crore penalty on sugar mills
Sugar stocks fall as CCI imposes Rs 38 crore penalty on sugar mills
GoPro Hero7 Black launched with gimbal-like stabilisation
GoPro Hero7 Black launched with gimbal-like stabilisation
Jet Airways stock falls to fresh 52-week low after I-T dept inspects company's books
Jet Airways stock falls to fresh 52-week low after I-T dept inspects company's books
SPONSORED