Industry status for warehousing & transportation
As we usher in the New Year, expectations are always high. This is even more so especially after the historical move of demonetization. With the Annual Budget 2017 round the corner, there are both transformational decisions from last year that deserve a mention along with key industry recommendations. GST Bill; a long held industry demand, would truly be a game changer for the logistics sector and would make us internationally competitive from the perspective of inventory holding and transaction cost. We anticipate the government to consider providing a blue print to resolve the pending issues of stakeholders before the budget. A faster roll out of GST would be important, so that the benefits start accruing.
Warehousing & Transportation is still not a recognised sector by the financial institutions and is deprived of the basic support. We look forward to having an industry status to be awarded to the sector along with tax benefits for investment in the warehousing sector, which should be on par with other sectors. Apart from this there should be a special incentive for use of solar energy in our warehouses.
Special tax holidays of up to 5 to 10 years for warehouses constructed in rural area can also be considered. The treatment to warehousing for non-agricultural commodities on par with infrastructure projects is to encourage investment in the warehousing industry and additionally creating multi-model logistics hubs will give transporters the choice of best modes and help in the efficient movement of goods.
There is also a need to look into applicability of the taxes on rental costs for the industry which is currently subjected to service tax of 14.5 % and is attracting tax deductible at source of 10%. If rent is considered as services being provided, TDS should not be charged at the same rate applicable to interest on deposits.
Land acquisition has been a challenge that needs immediate attention which required speed approval process for change of land title. There are significant parcels of land in and around metro cities under agricultural land category. If there is no agricultural activity over the past 8 to 10 years, they should be allowed to be converted into commercial use. This will create ample space available for construction of quality warehouses and significantly reduce storage costs and at the same time increase the land revenue for the Government.