New Delhi: Logistics companies rallied on Thursday after the government cleared substantial changes to the proposed Goods and Services Tax (GST) bill in a bid to get the crucial reform cleared in the Rajya Sabha.
The Cabinet on Wednesday cancelled a 1 per cent inter-state tax for states that manufacture goods, which is likely to assuage the Congress party that had objected to it.
There’s no word however on the Congress party’s other two demands – 1) of putting a cap on the GST rate in the Constitutional Amendment Bill and 2) setting up an independent dispute-resolution mechanism.
Jay Shankar, chief India economist & director of Religare Capital Markets said the scrapping of the 1 per cent levy may be an indicator of some “meeting ground” on the other contentious issues.
“The government may propose putting the principles of arriving at the GST rate in the Constitutional Amendment Bill, and a cap be put in the GST Law that would be followed up after the constitutional amendment is passed as a legal ring-fencing on tax rates to assuage Congress concerns,” he added.
For the tax reform to become a reality, the government needs not only the backing of states but also of two-thirds members in the opposition-dominated Rajya Sabha to pass a constitutional enabling amendment.
Meanwhile, shares of Allcargo Logistics, Snowman Logistics, Transport Corporation of India jumped nearly 5 per cent each, while Gati, VRL Logistics, Gateway Distriparks and Blue Dart added between 1-4 per cent.
Analysts say GST will reduce cost of logistics companies by eliminating various state taxes and state boundaries. The implementation of GST will also lead to higher GDP growth over the long term, they added.
As of 11.59 a.m., Allcargo logistics traded 5.46 per cent higher, Transport Corporation of India was up 4.48 per cent and VRL Logistics traded with 2.91 per cent gains compared to 0.36 per cent gains in the broader Sensex.
Bureau Report
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