GST Implementation Enables Removal Of Checkposts Across 22 States; Rs 10,000 Crore Would Be Now Saved Per Year!

After Goods and Services Tax (GST) was implemented pan-India effective July 1st, a wave of reforms and improvements have been witnessed across various sectors.

Although several of long-term benefits will take time to emerge, one major reform has been witnessed, which is instantly visible, and promises massive savings for the Indian economy: Checkposts.

Within 5 days of GST implementation, 22 out of 30 states have completely abolished checkposts on the highways. This means super fast traffic, no delays, and an instant power boost of Rs 10,000/yr for the Indian economy.

Revenue Secretary Hasmukh Adhia said, “As far as taxation is concerned, the check posts will go. There are a couple of other check posts like the state excise check posts. State excise is the state duty on liquor/alcohol, now these things may remain,”

8 states were checkposts still exists are Assam, Punjab, Himachal Pradesh and few North Eastern states. Soon, checkposts would be removed from these states as well, making Indian completely free from roadblocks and octrois.

Rs 10,000 Crore To Be Saved By Removing Checkposts

Globally, truck drivers travel 400 kms in a day. In the USA, truck drivers are able to travel 700 kms in a day.

But before July 1st, an Indian truck driver used to travel only 280 kms a day. And the reason was multiple checkpoints, octroi and taxes and other such obstacles.

When you are cruising at 100 km/hr, and need to stop 5 times a day to clear such unnecessary formalities, then the average speed is bound to come down.

But now, with GST, 22 states have removed all forms of checkposts, which means trucks are now cruising seamlessly, and there are no delays.

Besides, Indian economy is now saving Rs 10,000 crore per year as well.

As per a World Bank report, “Truck delays at checkpoints have been estimated to cost the economy anywhere between Rs 9 billion and Rs 23 billion (Rs 900 crore- Rs 2300 crore) a year in lost truck operating hours,”

And, bribes worth Rs 900 to Rs 7200 crore were paid as ‘Facilitation Payments’ to touts and agents.

Combined, Rs 10,000 crore per year would be now saved, as there exists no octroi or checkpoints, hence no touts and agents.

This is direct saving, as the money given as bribes would not be given now, and due to continuous travel, money wasted on fuels would be also saved.

End of Checkposts – End Of An Era

Ever since Independence, transporters and truck drivers were used to the concept of checkposts, and octrois, before entering cities and districts.

With the implementation of GST and subsequent removal of checkposts, this tradition has also ended.

In Mumbai, for instance, there were 5 Octroi check posts – Vashi, Dahisar, Mulund, Thane and Airoli. Effective March 2017, these 5 checkposts collectively collected Rs 7600 crore as taxes per year. Unofficial bribes, and ‘Facilitation Payments’ haven’t been included here.

Per check post collected somewhere between Rs 3 to Rs 4 crore per day.

Mahesh Patil, a former Octroi agent, said, “This is the death of a legacy that lasted nearly 52 years from April 1, 1965, until June 30, 2017,”

Interestingly, the real estate which would be freed after removal of checkposts holds immense value as well. In Mumbai alone, around 20 acres of land has been freed. This land belongs to Municipal Corporation of Greater Mumbai (MCGM).

Ajoy Mehta, Municipal Commissioner said, “No decision has been taken about the plots of land, which were used as Octroi check post and offices on the highways. The Commissioners concerned have been instructed to come up with suggestions for redeveloping the plots,”

I doubt any driver or transporter will ever ‘miss’ the presence of these check posts along the highways.

Do you think the removal of check posts is a major accomplishment of GST? Do let us know by commenting right here!

Header image: @thesuniljain