Inter-state e-way bill rolled out; only Karnataka to launch intra-state

Nationwide electronic or e-way bill system for inter-state movement of goods has been rolled out on Sunday, with GSTN officials saying that the platform is working smoothly.
Karnataka is the only state which has implemented the e-way bill system for moving goods within the state. The state has been using the e-way bill platform since September last year for intra-state movement of goods.

From today, businesses and transporters have to produce before a GST inspector e-way bill for moving goods worth over Rs 50,000 from one state to another.
Official at the Goods and Services Tax Network (GSTN), the company which has developed the IT backbone for GST regime, said that the e-way bill platform been working smoothly and Karnataka is also generating e-way bill for Intra-state movement of goods.
Touted as an anti-evasion measure and would help boost tax collections by clamping down on trade that currently happens on cash basis, the e-way bill provision of the goods and services tax (GST) was first introduced on February 1.
However, its implementation was put on hold after the system developed glitches in generating permits. With several states starting to generate intra-state e-way bills on the portal, the system developed a snag.
Since then, the platform has been made more robust, so that it can handle load of as many as 75 lakh inter-state e-way bills daily without any glitch. The system has been designed and developed by National Informatics Centre (NIC).
Till early last week, 11 lakh entities had registered on e-way bill portal.
This compares to 1.05 crore registered businesses under the GST and about 70 lakh filing monthly returns.
The GST Council, last month, had decided on a staggered rollout of the e-way bill starting with inter-state from April 1 and intra-state from April 15.

Slow take-off for GST e-way bill likely as traders stock up early

It could take at least a fortnight for the e-way bill generation to take off, though it would be introduced at midnight of March 31 for inter-state movement of goods worth over Rs 50,000.
Not many e-way bills might be generated in April since businesses had stocked up in advance to lengthen the time required to shift to the new system, experts said.

However, the authorities seem to be prepared this time after the collapse of the portal in the first phase of the roll out. For the past several weeks, awareness campaigns have been carried out across the country to educate people about the new system. The e-way bill portal collapsed on the very first day of its introduction on February 1, when only 480,000 bills were generated. To avoid a repeat, the load has been increased to 7.5 million this time. The system has gone through three rounds of testing for its load-bearing capacity, officials said.
However, according to experts, the real test would come once the bill is rolled out. “The proof of the pudding is in the eating,” one of them said.
Cargo shipments are likely to go up five to six times of their capacity on Friday and Saturday.
“One reason for the high volume is the annual closing of books. Also, people want to avoid the e-way bill till the midnight of March 31. They want to create an inventory for the next four to six weeks. For example, the assignment from Delhi to Chennai will take five to six days, so those consignments, if they leave by March 31, need not be compliant of the e-way bill system,” said SP Singh, senior fellow and coordinator, Indian Foundation of Transport Research and Training.
This was being done to evade taxes, he added. “In the next fortnight, volumes might dip to 50 per cent as demand would be low and people would take time to adjust to the new system,” he said.
Also, charges for ferrying cargo had also gone up and businesses were trying to beat the e-way bill introduction clause, transporters said. “Transporters are charging three times the truck rentals since they are ferrying untaxed cargo. No vehicles would be stopped, border check posts have been abolished in most states, the value and volume of goods being transported has increased,” said a transporter who has over 1,000 trucks ferrying cargo all over the country.
However, companies involved in backend preparations for a smooth roll-out said they were ready though ground-level implementation would be key. “We have prepared a system, which will get integrated with transporters’ system to generate an e-way bill and load with minimum intervention. The success of the e-way bill system depends on correct implementation at the ground level,” said Praveen Dhabahi, chief operating officer, Payworld.
Others questioned the very relevance of the e-way bill under the goods and services tax (GST) system. An effective invoice- matching system, aided by technology, could actually create an environment, where one would not need an e-way bill to monitor movement of goods, either within or outside the state, they added.
“If today the GST Council introduced invoice matching, there would be tighter reconciliation between sales and purchase data of buyers and suppliers. The same data could be made available to transporters and tax officials guarding state boundaries, which would help them keep a tab on the inter-state movement of goods,” said Tejas Goenka, executive director, Tally Solutions.
While authorities and large businesses are well prepared for the e-way bill, some small and medium enterprises (SMEs) are not sure about its processes and various other aspects, added ClearTax Chief Executive Officer Archis Gupta.
Between 2.6 million and 5 million bills were expected to be generated per day once it started, said Sudhir Singh, managing director, MargERP. “We expect a smooth roll-out,” he added.
Karnataka has notified simultaneous roll out of the bill for intra-state movement of goods too. However, Goods and Services Tax Network (GSTN) officials said the system would generate bills only for inter-state movement.
“It would be good to have an unequivocal clarification stating that intra-state transactions were not contemplated now for any state,” said M S Mani, partner of Deloitte India. It was necessary for a new concept like the e-way bill to stabilise before it was extended to cover movements of goods within a state, he added.
Bills for intra-state movements of goods were originally scheduled to be introduced in a phased manner later in April.

GST six months on: India's new indirect tax regime still a work in progress

The GST Council made a number of course corrections involving the rate structure, making life easier for SMEs, altering the timelines of the e-way Bill and putting in place an anti-profiteering mechanism. However, more correctives are needed
The goods and services tax (GST) is yet to stabilise six months after it was introduced with rules and rates undergoing frequent revisions. Lower than expected revenue collection has prompted the government to tighten enforcement. This could mean deferment of rate rationalisation and advancing the electronic way bill besides bringing back invoice matching and the reverse charge mechanism, to meet budget targets. “Compliance continues to be an issue. Given the falling collection, rate rationalisation may be deferred, e-way bills will be back to counter fears of tax leakage, leading to a further delay in getting the full benefit of GST to the industry,” said Bipin Sapra, partner- indirect tax, EY.
Anti-profiteering

The anti-profiteering mechanism kicking off in the absence of clear guidelines for the industry might create further complexity and lead to litigation, according to experts. Under the provision, the government has already begun sending notices to companies allegedly not passing on to consumers the benefit of reduction in tax. The screening committee has received at least 70 complaints, which could be taken up by the National Anti-Profiteering Authority.
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Pratik Jain of PwC India said there seemed a trust deficit between government and industry on the issue. “We are likely to see widespread litigation, unless clear guidelines are set in quickly. Industry would need to be careful in pricing decisions and keep the necessary documentation, should there be a scrutiny. Besides, the financial risk and litigation, it is also a reputational issue for large companies,” he said.
The anti-profiteering complaint application form requires detailed information such as sale price (pre-GST and post-GST), taxes (pre-GST and post-GST), benefits of input credits, etc. A separate application will need to be filed for each good or service for which anti-profiteering is alleged, making the process tedious.
Rates and revenue collection
Since roll-out on July 1, the GST rates for over 300 items have been changed. Around 200 items saw a downward revision in the November meeting of the GST Council. Although Finance Minister Arun Jaitley has spoken about converging the 12 per cent and 18 per cent slabs, this could take longer, with the focus turning to revenue mop-up three months before the financial year ends. Early implementation of the electronic way bill will also plug loopholes and revenue leakage.
Evasion of taxes is set to become tougher, with officers beginning scrutiny of those not filing returns. Central Board of Excise and Customs chairperson Vanaja Sarna has asked officers to consider sending notices to those not filing returns. Finance Secretary Hasmukh Adhia, in a meeting on December 9, asked central and state tax officers to review revenue collection in the first five months of GST roll-out.
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“It seems that postponement of measures under the GST regime such as matching returns, the e-way bill and the reverse charge mechanism has led to tax avoidance, which is reflected in the revenue for October. We are looking at revisiting these and tightening enforcement,” an official said.
GST revenue collection reached its lowest in November at Rs 80,808 crore. According to the government's internal estimate, if the trend continues, there could be a shortfall of Rs 25,000-30,000 crore in indirect tax collection this financial year. The highest GST slab of 28 per cent was narrowed to 50 items in November but further reduction might be put on hold. Rates for 176 items, including detergents, shampoos, and beauty products, were reduced from 28 per cent to 18 per cent, and for two others to 12 per cent.
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E-way Bill
Revenue slowdown prompted the GST Council to call an urgent meeting on December 16 and advance nationwide rollout of the electronic way bill on inter-state movement of goods from February 1 and for intra-state carriage from June 1. “Due to absence of border check posts, taxpayers were concealing income. Therefore, early roll-out of the e-way bill was decided,” said an official.
Six months on, GST still a work in progress

E-way bills will help tax authorities track movement of goods. Tax commissioners or officers empowered by them will be authorised to intercept any vehicle to verify the way bill or the number in physical form for all supplies. A facility has been introduced for tax officers of all states and Union Territories to view the details of returns and ledgers.

The industry has been arguing this would lead to significant documentation and logistics challenges for business. “One would have hoped to see more consultation and debate before implementation of the e-way bill mechanism. While it is good that there would be a common system across all states, if not properly implemented, it could lead to supply chain bottlenecks and dilute the objective of ‘one nation, one tax’,” said Jain of PwC.
Saloni Roy, partner-indirect tax, Deloitte, said one could expect some bumps along the way, with e-way bills becoming mandatory, multiple return filings becoming the norm, anti-profiteering and other investigations.