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Goods and Services Tax (GST), which was rolled out from July 1 this year,
promised a taxation structure that would greatly simplify tax compliance, bring
every state in the country under the same tax, and thus reduce the incentive to
do cross border shopping and tax arbitrage. The belief was that since the goods
would attract the same taxes and therefore be at the same price in every state,
there would be less incentive for sellers to sell in one state but generate
invoices in another because of the different rates of taxes in the two states.
A spin-off from that promise was that there would be no delays at inter-state
border check posts, which often delayed goods by as much as two or three days,
if they were to cross several states from point of shipping to destination. The
smooth movement of goods across the country was therefore one of the promised
benefits. Now it appears that the central government and the state governments
have reason to believe that goods are being sold at one state and invoiced in
another, despite having common tax rates. Or at least, that seems to be the
reasoning behind the GST Council deciding to advance the date for implementing
the E Way bill - an electronic way of tracking movement of goods.
The thought behind the eway bill is to track the movement of goods above Rs
50,000 within the state, and from one state to another. It is supposed to check
GST evasion and put to rest the worries of different states that they were
losing out on GST revenues. Centre was equally keen to shorten the mismatches
and delays in matching invoices that is taking place at the moment. The GST eway
bill is being seen as a panacea to check GST evasion.
Though the present day eway Bill system promises the presence of technology like
RFID (Radio Frequency Device) that it promises to apply, the truth is that it is
quite regressive and puts onerous conditions of compliance. Any goods worth Rs
50,000 or above needs an e waybill if it has to go beyond 10 Kms. Any registered
taxable person, transporter (Registered /Unregistered) can generate the e way
bill from the ewaybill.nic.in. The e way bill needs to be generated before the
goods are moved, and it has a limited validity period based on the distance
covered. For a distance of upto 100 Kms, an eway bill is valid for 1 day. For
200 Kms, it is valid for 2 days and so on. If the good fails to be shipped on
the date of generation, the e-way bill can be cancelled within 24 hours. If any
case of the mode of transport is changed, a fresh eway bill would have to be
generated. If some goods are sent back by the receiver, another e way bill needs
to be generated. So the compliances are supposed to increase in Eway bill when
it’s rolled out.
But the question is whether it would really help in faster and smoother movement
of goods though we argue that the check posts are going to be suspended under
Eway bill system. Well, one can tell that all these are likely to only delay the
smooth movement of goods from one state to another. It could also unleash
exactly the kind of border check posts the GST had promised to remove. And
finally, it can create problems galore for everyone ranging from physical
dealers to e-commerce firms. For example, suppose a high end television or audio
set that costs over Rs 50,000 is shipped by a truck from the factory to the
dealer, and then from thereon by the dealer to the customer's house, it will
need two separate e-way bills. If the customer in the meantime, cancels the
order before it reaches him, another e-way bill will have to be generated.
The e waybills will then would also have to be matched with the invoices. In
general, it just adds a layer of complexity to the whole process of shipping
goods from one state to another. It also increases the burden of the GST Network
(GSTN), which is already facing multiple problems in matching invoices. The Eway
bill would, be a failure if it does not resurrect the imperfections from the
erstwhile taxation laws.
Let us learn about the equation between
E
waybill under GST and logistics industry and see whether it is equally
balanced when it comes to the topic of E waybill. Though we may say that layer
of compliances would increase under E Way bill mechanism for movement of goods
which is the one face of the coin but there also lies a truth and benefit on the
other face of the coin that e way bill would bring better revenue using the
benefits of Information Technology, and it would also act as an effective tool
to track movement of goods and check tax evasion ensuring that goods are being
transported complying with the GST Law.
The Eway Bill promises multiple benefits for the transporters. The advantages of
E Way Billing can be summarized this way:
|
Reasoning |
No more Cumbersome Documentation |
As existing state-wise documentation required for movement of goods
will no longer be required any more. |
Quicker movement of Consignment |
Removal of the large number of check-posts across state borders and
national highways |
Reduced Logistics Cost |
E waybill would reinforce proper invoicing and this way would reduce
tax evasions. |
However one cannot also just discount away the bottlenecks that would pose
problems for Logistics industry. The disadvantages of Eway bill can be
summarized in the following way :
|
Reasoning |
Accessibility / familiarity to IT
Infrastructure |
Small transporters especially from rural areas will face difficulty
in securing access to GSTN portal for generating the eway bill. |
Strict timelines for validity of E way bills
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The guidelines lied for Eway validity have been remarked to be
unrealistic by some industry experts. For example an e-way bill
generated for a distance of 1000 Kms is valid only for ten days from the
date on which it is generated. However research indicates that the
average speed of Indian truck drivers is 20-40 km/hour, and the average
distance covered daily is 250-400 Kms. Moreover when heavy machinery
like a Boiler or big equipment like wind mill blades are transported on
a specialized truck, the number of days it may take for it to cover 500
km can be much more than 10 days. |
Maintaining multiple bills for same consignment
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E-com retailers use several modes of transport to ensure that goods
reach the customers from the warehouse or the manufacturer’s location on
time. Since a fresh e-way bill must be generated every time the mode of
transport is changed E-com will definitely end up generating a large
number of bills for every shipment. |
Possible delays in generating eway bills |
Many a times customers end up cancelling orders even while the goods
are in transit, or return goods already purchased. Fresh e way bills
have to be generated each time this happens. This poses an issue for
E-com retailers who use third party logistics. So this would mean that
only after the transporter also uploads the details on the GSTN, the
E-com operators will be able to generate eway bills which can cause
potential delays in shipment. |
There is mixed reaction from the industry regarding the implementation of the
E-way bill. Some contemplate that this can create complications for transporters
as it adds a layer of complexity to the whole process of shipping goods from one
state to another.
Summing up, we find that there are expected positive impact of e-way bill and
also visible loopholes in the realization of the vision of the bill. At this
phase when the e way bill is in the genesis stage, it will be too early to draw
a conclusion as to whether the advantages of E way bill would outweigh the
disadvantages or vice-versa and implementation would be the only key that would
decide what e-way bill would turn out to be in days to come by. br />
And when it comes to the software implementation, we believe that the software
companies would also come up to live to the expectations of taxpayers wherein
once a bill is generated or prepared by the software, the E Way bill is prepared
simultaneously from the same software as well. And the most popular erp
software, Tally.erp 9 is one such best ERP Software we can count on as it has
continuously strived to put across all that comes from GST corner by updating
its software different GST features like managing advance receipts, reverse
charge, input tax credit, branch transfers, bill of supply, export invoices and
other adjustments.
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