Goods and Service Tax(GST) - All you need to know about the GST e-way bill system

What is e-way bill?

It is an electronic documentation detailing the movement of goods and has to be carried by transporters for any consignment exceeding Rs50,000 in value. It can be generated from the GSTN set up for the e-way bill system by the transporter before the movement of goods begins. The e-way bill’s validity varies depending on the distance that the goods have to travel. Typically, the bill’s validity is one day for every 100km of movement of goods.

Is it mandatory for all movement of goods?

The GST e-way bill is mandatory from 1 April for all inter-state transport of goods valued above Rs50,000. It will be made compulsory for the moving goods within a state in a phased manner from 15 April. Some goods that are out of the e-way bill’s ambit include perishable items such as meat, milk and milk products and fruits and vegetables. Other items that don’t need an e-way bill are gold and silver jewellery, cooking gas cylinders, raw silk, wool and handlooms.

Why is it important?

The e-way bill is a key anti-tax evasion measure and is a crucial part of the GST architecture. Tax authorities believe its implementation will dissuade tax evaders from underreporting transactions. It will also check instances where the entire transaction is not recorded due to connivance between the seller and buyer. It will provide a boost to GST revenues, which have stabilized around Rs85,000-90,000 crore. The government is hoping that this anti-evasion measure will bring buoyancy.

What are the concerns?

The industry is worried that the technology system may not be prepared to handle the huge e-way bill volume and that this may cause a disruption to trade. When the e-way bill system was initially rolled out on 1 February, technological glitches caused long delays in generation of GST e-way bills. This led to trade coming to a standstill, forcing the government to defer its implementation.

Another worry for industry is the potential scope for harassment by tax authorities. Taxmen have powers to stop trucks and check e-way bills and transporters fear this may lead to rent-seeking.

What safeguards have been put in place?

To avoid technological glitches, the GSTN and the National Informatics Centre have ramped up the infrastructure. The system can now handle 75 lakh e-way bills daily, compared with 26 lakh earlier. To prevent harassment of taxpayers, e-way bill rules specify that goods will be inspected only once during the journey except in cases where specific information on tax evasion is received. Further, in case a vehicle is detained for more than 30 minutes, the transporter can report it on the portal