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Service tax on rent a concern
March, 05th 2007
The service tax on rent on the immovable properties may have a indirect impact on the logistics costs, according to Vineet Agarwal, executive director of the Transport Corporation of India (TCI). 
Agarwal said that in order to achieve a GDP growth of 9.2 per cent and sustain the 11 per cent growth in the manufacturing sector, greater focus on development of infrastructure, especially of roads and highways and warehousing, was needed, as these formed the backbone for any industry. 
The TCI director welcomed the announcement of the increased outlay for the National Highway Development Programme (NHDP), but with a note of caution. "The thrust should be on the development of access-controlled expressways as these have a multiplier effect on the entire economy. Apart from saving on time, the expressways facilitate the usage of multi axle vehicles, which save diesel consumption and are more environment friendly", he commented. 
He said that link roads with express highways too needed to be developed to ensure minimisation of choke points. 
According to him, these initiatives were imperative in view of the fact that 65 per cent of freight was transported by road. 
Agarwal said corridors with high density of traffic had to be upgraded to six or eight lanes to deliver the benefits in terms of costs and time that logistics users were expecting. 
Also, he called for changes in rules that would allow much better use of assets. 
For example, separate registration numbers for the engine unit and towed unit or trailer in articulated trucks would allow a single engine unit to be used to handled multiple towed units or trailers. Acute congestion at ports at present meant that hundred of such trailer-trucks were stuck there for days because rules did not permit the engine unit to be disengaged and reused to handled other trailer units. 
If this rule was amended, parked trailers at ports could be handled by one or two engine units while the balance engine units could be used to haul cargo elsewhere. 
In parallel, there was need for demarcation of areas for activities relating to warehousing and for logistics parks on the lines of SEZs. There should be incentives for building vertical modern warehouses as they ensured better land utilisation, he pointed out. 
He welcomed the announcement of the gradual shift to the GST regime. "The government should expedite the shift to a national level Goods and Service tax (GST) as this would result in efficient movement and distribution of goods across the country, help in setting up setting large regional warehouses and ensure better control on pricing", he commented. "By providing the roadmap for the adoption of the GST, companies would be able to plan and manage their operations more effectively," he added.
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