How Will the Changes in GST E-Way Bill Impact the Economy?

Generation of e-way bills was made compulsory by the government from 1st of April, 2018. But, what exactly is an e-way bill, and how will it affect the taxpayers? To understand the effects of the e-way bill, we need to learn what it means for traders and the logistics sector.

What is e-way Bill?

E-Way Bill or Electronic Way Bill is a unique document generated electronically for the consignment of goods to a different place. e-way bill was proposed to curb tax evasion in the country. Sadly, apart from the first optimistic cry around the idea, the logistics and technical glitches have turned the e-way bill into a nightmare for the taxpayers.

The major repercussions of the e-way bill are experienced by the logistics industry, FMCG sector and e-commerce operators.

Updates

E-Way Bill Blocking

Rules 138E (a) and (b) of the 2017 CGST Rules dictate that if the taxpayer does not file Form GSTR-3B returns/Form GST CMP-08 statement for two or more tax periods, EWB (e-way bill) generation will be restricted for the taxpayer. EWB generation blocking will be applicable to all taxpayers, irrespective of AATO (Aggregate Annual Turnover), and will be allowed to generate EWB only on filing the pending forms and statements.

VAHAN-e-Way Bill Integration

The e-way bill portal will get the vehicle registration number validated now, as it has been linked to the VAHAN system.

Why Is It Important to Generate an E-Way Bill?

One of the main reasons in favor of Goods & Services Tax is its ability to unify the market and avoid the inter-state taxation system that was confusing and riddled with multiple clauses and sub-clauses. A report released by the Ministry of Road Transport and Highways suggests that a conventional truck in India spends 20% of its commuting time in the inter-state checkpoints. In states such as Rajasthan and Maharashtra, the average waiting time is usually 20-30 minutes, and it rises up to two hours in states like Bihar and Jharkhand. GST and e-way bills were both introduced by the government to avoid the transit delays and rampant tax evasion caused under the VAT regime.

The GST regime required each e-pay bill generated by a buyer of goods to be updated automatically in the Outward Sales Return (GSTR 1) of the supplier, which leaves a negligible scope for tax evasions under this system. In the former tax regime, tax officials had to cross-check the tax returns filed by the suppliers manually for verifying whether the consignments fall under the tax net or not.

Also, a single e-way document for the movement of goods throughout the country could save tons of paperwork and sidestep various inter-state clearances for buyers, sellers and transporters. In the previous tax regime, each state framed its own rules for the movement of goods from and to it.

When Can Someone File an e-way bill?

The primary requirements for generating an e-way bill under the current GST regime is that the consignment must be getting transferred through an interstate or intrastate channel, and it must have a value of more than INR 50,000. The e-way bill has replaced the way bill, which existed during the VAT regime and was used for the consignment of commodities.

Who Can Generate an e-way Bill?

Three kinds of individuals can generate an e-way bill: a GST-registered person, a non-registered person and a transporter of goods.

A registered person can generate an e-way bill when he/she is moving goods that have a value greater than INR 50,000. It is applicable only when the products are being transferred to or from the possession of a GST registered person. The registered person has the choice to not generate the e-way bill if the value of the goods being transported is less than INR 50,000. Similarly, an unregistered person is also required to generate an e-way bill when the value of goods transported exceeds INR 50,000. When a GST-registered person is receiving goods from an unregistered person, then they’re responsible for ensuring that the supplier meets all the compliances. Apart from GST-registered and unregistered taxpayers, transporters who carry goods through any form of transportation, including planes, road, rails, etc., are required to generate an e-way bill.