Knowledge Base

GST – understanding the e-way Bill

The Goods and Service Tax (GST) of India, introduced in 2017 by the GST Council, changed the tax structure of the country. Before GST, a business entity had to comply with many forms of direct and indirect taxes. The GST made redundant the indirect taxes, by bringing them under a single umbrella.  Like the name implies, ‘indirect taxes’ are those that the customers do not pay directly to the government but are rather levied on the manufacturer or seller goods and the providers of services. The sellers add the tax expense into their costs, and the price the customers pay is inclusive of GST. GST was first implemented by France and most of the developed nations have now followed suit. In principle, GST aims at making paying taxes simpler, and prevents people from shirking away while paying taxes. India is one of the few countries that follow a dual GST for now. In a dual GST system, both the state and the central government levy GST. The component of GST levied by the central government is called as the CGST, and the component of GST levied by the state is called the SGST. The purpose behind introducing the dual GST is to help the states minimize their revenue loss due to the abolishment of a bunch of other taxes like the service tax, excise duty, value added tax (VAT) and some other such taxes.

The e-Way Bill
The electronic way bill, or the e-way bill, is part of the GST council’s effort to simplify tax payment. It replaces the tedious Border Commercial Tax. In the period prior to GST, any goods that were transported across states had to pay tax to individual states. So, for example if there were a manufacturing company in Pune, Maharashtra that needed to send goods to Kolkatta, West Bengal, the Pune based company had to pay border tax to all the states it encountered en-route.  This entailed delays as the trucks transporting the goods had to halt at each Octroi post, and pay the money. It made life difficult for everyone, the transporters because they had to halt at each post, the manufacturer as it had to pay tax to each state, and the government as it had to keep track of all the challans. With the introduction of the e-way bill under GST, the process has been simplified quite a lot. An e-way bill is a set of document in triplicate that is raised online by the manufacturer. One copy is retained by the manufacturer, one copy is required to be carried by the goods transporter (along with copy of the invoice), and one copy is sent to the recipient of the goods. Now, when the manufacturer from Pune needs to send the goods to Kolkatta, he will simply generate the relevant documents – that too online – and hand over the relevant challans to the transporter. Since it is pre-generated, the transporter will not have to be stopped at each check post for frivolous reasons. The e-way bill is to be raised for any consignment whose value is Rs. 50000/- or more, irrespective of whether the goods are transported within the state or are sent across one or more states.

The e-way bill has been mandated by the government of India in terms of Section 68 of the Goods and Services Tax (GST) Act. It is generated through the GST Common Portal for e-Way bill system - - by registered users or transporters. The documents such as tax invoice or bill of sale or delivery challan and the transporter's ID must be available with the person who is generating the e-Way bill. The e-way bill came into effect on April 1, 2018, and has been adopted by most states across India. Here are the salient features of the e-way bill:

  • The e-way bill is required to be generated for any goods that have a declared value of Rs. 50000/- or more
  • The person in charge of a conveyance shall carry —(a) the invoice or bill of supply or delivery challan, as the case may be; and (b) a copy of the e-Way Bill or the e-Way Bill number
  • The details of e-Way Bill generated shall be made available to the recipient, if registered, on the common portal, who shall communicate his acceptance or rejection of the consignment covered by the e-Way Bill
  • If the recipient of goods doesn’t communicate acceptance or rejection within 72 hours, it will be deemed as accepted by the recipient
  • The validity period of the e-Way bill is calculated based on the 'approximate distance' entered while generating the e-Way bill. For every 100 km, a validity period of one day is calculated as per existing rules
  • Once generated, e-Way bill cannot be edited or modified. Only Part-B can be updated. However, if e-way bill is generated with wrong information, it can be cancelled and generated afresh
  • Any person can verify the authenticity or the correctness of the e-way bill by entering EWB No, EWB Date, Generator ID and Doc No in the search option on the e-Way Bill Portal
  • If validity of the e-Way bill expires, the goods are not supposed to be moved. However, one can extend the validity of the e-Way bill if the consignment is not reaching the destination within the validity period due to exceptional circumstances  such as natural calamity, law and order issues, trans-shipment delay, accident of conveyance, etc
  • Good transported by animal driven carts need not generate e-way bills
  • As of now, e-way bill is not required for non GST goods like alcohol, petroleum and petroleum products, natural gas and aviation turbine fuel

Benefits of e-way Bill
Since GST aims at simplifying pay taxes, e-way is seen as a step in that direction. Since it is pre-generated online, everyone involved knows exactly what is transported, the value of the consignment and the destination. This leads to reduced halts and speeds up the delivery process. As per one study, these lesser halts will translate into savings of crores of rupees each year in transportation costs. Secondly, since the process is easier and without manual intervention, it prevents the tendency to evade tax. Since there is only one e-way bill involved, it also removes cumbersome documentation.

The GST in India is set to change the way business is carried out. The e-way bill is yet another step that makes it easy to pay interstate tax. Nevertheless, it is not an easy task for small and medium scaled industries to comply with the GST requirements irrespective of whether they are into manufacturing of goods or provide services. It is therefore beneficial to hire a trustworthy and knowledgeable GST consultant. Reliable GST consultants are available in Pune, Mumbai, Ahmedabad and other industrial cities of India for this purpose.