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Service Tax in transportation sector has come as a menace for
the people who are in this sector. Levying of 12.24% service tax
on freight has come as blow for them, even as the ocean freight
and air freight stand waived. Experts find government’s
action may become counterproductive to its endeavor in making
Indian exports price competitive.
The transporters countrywide have registered their strong protest
against the imposition on the service tax, specially this will
discourage the vendors based in foreign countries who often push
for a complete package of services that involve storage, warehousing,
clearing and forwarding operations, and haulage from port to their
factories etc.
Contributing more pains to the hike in service tax is the escalating
rates of diesel, which has spiraled the transportation cost by
10%. Increased transportation cost of raw materials and finished
goods to distant states within the country has hit the industry.
The recent verdict from India’s top legal institution, Supreme
Court against loading in trucks beyond their usual capacity of
9 tonnes for safety reasons have also added to the increase in
freight cost. The court’s ban has also scaled up the demand
for trucks, which again has put pressure on the availability of
trucks, leading to further rise in freight cost.
Quite obviously transporters are not happy about the situation.
Sources say that before the court’s order banning overloading,
trucks carrying up to up to 16 tonnes that was almost double the
capacity. Transporters put forward their logic that, this saved
diesel, extra trip expenses and to some extent environmental imbalance.
How sound are logics that is for the experts to decide, however,
the ground reality remains as stark, and that is the whole episode
has incurred the hike in freight cost by 30%. Exporters lament
that this has led to thinner industry margin, since the increased
freight costs are affecting them heavily. According to them this
can not be reimbursed through a hike in production rates. |
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