Transportation of Goods under GST Regime

Goods and Services Tax is expected to unite India as one nation in the real sense. The new tax regime is expected to do way most of the tax collection barriers in the country. Only a few shall remain as the data collection point but those will also not form an interruption in free flow of goods. According to an analysis around 60% of the time of the transporters is wasted on these barriers which have an impact on the product pricing and supply of goods. Where a truck in US travels around 800 km a day, in India it is just 250 km a day. It’s not because of infrastructure but also because of checks and controls established en-route of the trucks.

It has been proposed that every transporter shall be carrying an Invoice Reference Number (IRN) along with the bill when transporting the goods. This IRN shall be generated electronically by the supplier after giving the details of the invoice, proof of payment and other relevant details. This IRN shall remain valid for 30 days. This means that once IRN is generated, goods have to be transported within 30 days. In case of check-post deployed by the revenue authority during the transport, the details of the goods being carried can be cross-verified online by the tax authority with the help of IRN. Hence this shall reduce the time at the check-post.  Once this trust between the transporter and tax authorities is developed, the barriers will go away in the real sense which will make transportation easy.

In order to ensure that the system works as it is intended to be, there needs to bring the behavioral change in the mind set of the revenue authorities. They should not pre-assume that every transporter has a malafide intention which at time becomes the source of harassment for the honest taxpayer.

The government has also proposed that the transportation under GST shall be without any wastage of time. Like pre-paid tags which is used at the toll plazas it is expected that the systems shall be installed which would auto detect the details of the IRN without destructing the movement of the trucks. It has two benefits 1. The tax terrorism will go away. 2. With auto checks the data of the vehicles passing from a barrier shall also be authentic.

Apart from the controls during the transport, there are other controls as well. If a transporter is found transporting the goods without IRN, he shall be personally liable to pay tax on those goods. More so, his vehicle can also be impounded by the tax authority. Another control shall be at the time of filing of the returns where the complete details of the invoice in terms of goods received, quantity, rates and other details have to be mentioned in GSTR 1, GSTR 2 and GSTR 3. The data of the supplier and recipient shall be matched and if any mismatch is arrived both the parties shall be held liable for the same.

In the above scenario it is expected that post GST our country will witness free flow of goods resulting into lower transportation cost, quick supply and lesser wastage of goods. This would certainly add on profits and bring ease of doing business in the real sense.  

by:

Keshav R Garg

(B.Com, FCA, CS, ISA(ICAI))

Faculty for GST: Indirect Tax Committee of ICAI

Author: Bharat's GST Ready Reckoner

            A Handbook on GST

Adviser for GST: Industries Association of Chandigarh 

Member: Indirect Tax Committee of CII, PHDCCI, MyGst.MyTax Foundation

Address: 3328, Sector 27 D, Chandigarh, India - 160 019

Phones: +91-172-461-3328, +91-98880-90008

Mails: mygst.mytax@gmail.com, keshavgarg@kdai.in