In the 24th GST Council meeting, we witnessed that GST Council has approved mandatory compliance of e-way bill for intra-state movement of goods from June 1, 2018. Though the compliance date for inter-state movement of goods has been fixed as Feb 1, 2018 and its final. Meaning movement of goods within the state should be accompanied by E waybill from beginning of Feb 1, 2018. And for Intra State movement of goods it has been decided that during the intermediate period from Feb to June 2018 after which it would be made mandatory the council has decided to give E Way bill a short run in order to analyze the process and difficulties which might pop up eventually on its implementation. And this was clear from the statement that the Council wants the E way bill on trail run from January 1, 2018.
So what is an E Way bill under GST and how is it going to impact the way of doing business now after its implementation are the questions which are haunting every tax payers mind and I have also learnt that this has become a reason for loss of peace in mind for tax payers at large. Why is it so and what are the challenges we have in E Way bill are the concerned topics for our discussion in this article.
E way bill means an electronic way bill which is meant for movement of goods. The E-way bill has to be generated on the GST Network. A 'movement' of goods of more than Rs 50,000 in value cannot be made by a registered person without an e-way bill. Generating the e-way bill, the parties to a supply (viz, Supplier, recipient, and the transporter will be allotted a unique e way bill number (EBN) without which movement of goods cannot be carried out in the GST regime. Earlier also in previous taxation laws we had something related to e way bill now but it was a nightmare for suppliers then because movement of goods couldn't take place without obtaining these 'waybills' from VAT authorities. Back then under previous taxation laws, waybill were considered as physical document that allowed movement of goods. But the compliance around waybills caused restricted movement of goods across states. But Post GST these way bills have been replaced with e-way bills which aims at mitigating the problems caused by waybill compliances.
So when should an e-way bill be generated? Well from the reading of the above one can tell that an e-way bill will be generated when there is movement of goods -
• In relation to a 'supply'
• For reasons other than a 'supply' ( say sales return, purchase return)
• Due to inward 'supply' from an unregistered person.
Why E Way bill? Everyone has this question raised in their minds because the work trial in this process is going to increase the workload of businesses and trades which is a concerning factor for them. But the government thinks the other way as the very purpose of introducing e-way bill mechanism in the GST regime was to plug tax evasion loopholes. Tax evasion was one of the reasons cited by the government for the fall in revenue collection in October. But could there be a middle ground where both taxpayers and government could agree and E Way bill mechanism could be made a smoother ride for tax payers is a question un attended which only time would unveil. But what an E Way bill would do is it would bring transparency into the system and there by tax evasion would be curbed to bigger extent. It's a good move but we also need to consider the impact it would make when it's implemented.
With the stage set for E Way bill from Jan 1, 2018 it's time that we learn this process of E way mechanism from now in order to comply with it. Here's what you need to know about generating E Way bill on GSTN. It is the CGST Rules that mandates the generation of E way bill in following transactions:
i. By a registered taxable person: Each and every registered person who causes movement of goods of consignment value exceeding Rs. 50,000/-.
- In relation to a supply; or
- For reasons other than supply; or
- Due to inward supply from an unregistered person,
Shall furnish information relating to the said goods in Part A of FORM GST EWB-01, electronically before the commencement of such movement of goods.
- The value of consignment should exceed Rs. 50,000/-.
- It is to be generated prior to commencement of movement of goods.
- "For reasons other than supply" will include job work, removal for testing purpose, send on approval basis, etc.
ii. Taxable registered Person is Consignor or Consignee (Mode of Transport May be Owned or Hired) or is Recipient of Goods: Where the goods are transported by the registered taxable person as a consignor or the recipient of supply as the consignee, whether in his own conveyance or a hired one or by railways or by air or by vessel, the said registered person or the recipient may furnish information relating to the said goods in Part B of FORM GST EWB-01, electronically before commencement of such movement of goods.
iii. Registered Person Giving the Goods to the Transporter of Goods: Where the goods are handed over to a transporter for transportation by road, the registered person shall furnish the information relating to the transporter in Part B of FORM GST EWB-01 on the common portal and the e-way bill shall be generated by the transporter on the said portal based on the information furnished by the registered person in Part A of FORM GST EWB-01.
iv. By a registered taxable person: Each and every registered person who causes movement of goods of consignment value not exceeding Rs. 50,000/-. It means that the transporter or the registered taxable person, at their option, may generate and carry the e-way bill even if the value of the consignment is less than Rs. 50,000
v. By an unregistered person: Where the movement is caused by an unregistered person either in his own conveyance or a hired one or through a transporter, he or the transporter may, at their option, generate the e-way bill in FORM GST EWB-01. Provided >>>
- the distance over which goods are proposed to be moved is < 10 Kms
- and these are moved within the State or Union territory from the place of business of the consignor to the place of business of the transporter for further transportation
Then the supplier or the transporter in all such cases need not furnish the details of conveyance in Part B of FORM GST EWB-01.
Are there any goods, the movement of which does not entails following up of E Way bill along with its movement :In the following cases E way bill need not be generated.
• Where the goods being transported are off Consumer product nature (notified by way of annexure exempting 154 items from purview of E way bill)
• Where the goods are being transported by a non-motorized conveyance.
• Where the goods are being transported from the port, airport, air cargo complex and land customs station to an inland container depot or a container freight station for clearance by Customs; and
• No requirement of E way bill if goods are being transported within such areas as are notified under clause(d) of sub-rule (14) of Rule 138 of the Goods and Services Tax Rules of the concerned State.
What about the validity period of E Way bill? The e-way bill or a consolidated E-way bill generated under this Rule shall be valid for the period as mentioned below from the relevant date
• Up to a distance of 100 Kms >>>
period of 1 day
• For every 100 Kms or part there after. >>> One additional day
What are the documents that needs to be carried along with E Way Bill GST:
• Physical Documents or Virtual Mapped invoice or bill of supply or delivery challan, as the case may be which shall be either kept as physical documents during the conveyance or mapped to a Radio Frequency Identification Device embedded on to the conveyance in such manner as may be notified by the Commissioner.
• Invoice Reference Number and such invoice number shall be valid for a period of 30 days from the date of uploading a tax invoice generated from GST portal on Uploading of Invoice in Form GST INV 01 by the registered person.
• The person in charge of a conveyance shall carry Unique Radio Frequency Identification Device embedded on to the conveyance and map the e-way bill to the Radio Frequency Identification Device prior to the movement of goods if the commissioner so notifies.
What we can do to prepare ourselves for the e-way bill?
At first look, the e-way bill does come across as complicated, especially for a business society like India, which has just got habituated to maintain accurate, up to date and real time records of transactions, thanks to GST. It goes without saying that GST itself would have driven thousands of small and medium businesses across the country to adopt to technology like never before - if a business was on manual books, they would have at least graduated to a computer system and excel; if a business was using excel, it would have now started to appreciate the need for an ERP software. This is because, the need of the hour is to maintain all business records in a GST compliant fashion. E-way bill will further add to the need, as now a business needs to be on top of which are the eligible inter-state and/or intrastate transactions, that too above INR 50,000, for which an e-way bill needs to be generated. Since the transportation of goods, necessarily demands timeliness, businesses will need to move quickly to ensure that the requisite invoices are generated, transactions are completed and forms are filled, so that the shipment is delivered in time. If a taxpayer does not have timely access to his business data, it could lead to delays in the process, which will then result in shipments not reaching on time, cancellations etc. which will impact the working capital. In such a situation, it is best that businesses who are bound to generate e-way bills come February, prepare themselves by already investing in business management, accounting and compliance - in other words a comprehensive ERP software, which will help them to quickly take the right logistics decisions and in turn, help them to ensure a hassle free supply of goods.
Conclusion: The roll out provisions for E Waybill has only with respect to inter state movement of goods which the council in its 24th GST Council meeting rightly notified by a press conference, but the uniform system of e-way Bill for inter-State as well as intra-State movement will be implemented across the country by 1st June, 2018. The Council made it a clear statement that it is expecting the system for both inter-state and intra-state e-Way Bill generation to be ready by January 16, 2018 itself thereby trade and transporters can start using this system on a voluntary basis from January 16, 2018. But from June 1 2018 onwards mandatory shift in gears would be imposed as worded from the decisions taken at the 24th GST Council meeting.