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GST implementation: Would e way bill create complications for transporters or will it fulfill the benefits it promises

  By : , Delhi, India       2.2.2018         Mail Now

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 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:

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 :

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 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 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.

TAGS: e way bill,   GST,   What is e way bill?,   eway bill under GST,  

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