Commerce Ministry Seeks Single GST Rate on Multimodal Transport of Vehicles

The commerce ministry has pitched for single GST rate for multimodal transportation of vehicles to improve logistic services and reduce the compliance burden on automobile manufacturers, an official said. Multimodal transportation includes a combination of more than one mode of movement, such as rail, road or sea, for end-to-end delivery of goods.

Automobile industry body Society of Indian Automobile Manufactures (SIAM) had approached the logistics department of the ministry raising issues faced by companies due to lack of a clearly defined multimodal GST (Goods and Services Tax) structure. In the present scenario, manufacturers and their logistics service providers have to deal with the issue of variable GST rates, applicable on various sectors of the entire multimodal transportation process, according to SIAM.

They have stated that currently there is no clearly defined multimodal GST structure in place where vehicle makers could hand over finished goods through a single document to a third-party logistics service provider from the factory on an end-to-end basis.

The government official said that the current structure is leading to complexity in the entire taxation system that often leading to certain inefficiencies. The ministry has suggested the GST council for single GST rate for multimodal transportation of vehicles, the official added.

The SIAM has also pointed out that in the multimodal movement of goods, where multiple modes of transportation are involved, the present GST law is subjective and is left to the interpretation of consultants or taxation experts to provide better understanding of the applicable tax rates.

"We would prefer all the activities under multimodal movement to be bundled together and considered one and may not be seen in isolation," the association has added. The government has appointed a special secretary (logistics) in the commerce ministry to facilitate logistics with a view to cut transaction costs for industry.

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