Impact of e-way bill on logistics industry
- Goods and Services Tax
- Jun 26, 2018 | CA. Chanakya Shah
The logistics industry in India is expected to grow rapidly under the Goods and Services Tax (GST), largely thanks to the reduced checkpoints, warehouse consolidation, and automated technology resulting from the implementation of the e-way bill, which saves transporters both time and money.
Benefits of the e-way bill for the logistics industry
- Reduced documentation
The logistics industry is looking at a substantial reduction in documentation. In the past, transporters had to prepare documents for each state they passed through while delivering goods. Under GST, however, one e-way bill is sufficient for a single consignment passing across several states.
For example, to move goods from Delhi to Tamil Nadu, taxpayers only need to generate one e-way bill, even though the goods must pass through several states before reaching their destination. In addition, once RFID technology is implemented, transporters will not be required to carry physical copies of an e-way bill, which will be synchronized and verified through the device itself.
- Faster movement
Adoption of the e-way bill will also lead to faster and smoother movement of goods with the removal of a large number of state border and national check posts. Vehicles will only be detained once in a state, unless authorities suspect tax evasion. If a vehicle is detained for more than 30 minutes, it must be reported.
- Reduced transportation costs
Through faster and more efficient transportation, the logistics industry will see a substantial reduction in fuel and other transportation-related costs as well.
- Consolidated warehouses
Prior to GST, companies often had warehouses in nearly every state to avoid triggering a new tax every time their goods crossed state lines. Now, with GST enabling goods to flow more freely from state to state, companies can place larger warehouses in more strategic locations, further reducing costs.
Downsides of the e-way bill for the logistics Industry
- IT infrastructure
Because the entire e-way bill mechanism is technology driven, small transporters may not have the requisite IT infrastructure to generate e-way bills. There may be challenges pertaining to internet connectivity, especially in tier-three cities and rural areas.
In addition, as many people in India experienced during the e-way bill’s first implementation on 1 February, 2018, any technical problems with the GST Network could cause complete stoppage of business, as no movement of goods above Rs. 50,000 can take place without a corresponding e-way bill.
Increased costs for smaller transporters
Smaller transporters may actually see an increase in costs as they gear up to invest in proper IT infrastructure and employ personnel capable of generating e-way bills.
- Multiple bills
Every time the mode of transport changes, a new e-way bill must be generated. This could lead to the need to generate multiple bills for a single consignment. This would be more applicable to ecommerce retailers and the courier industry, where there are often multiple changes in the mode of transport for a single consignment.
Since the e-way bill is still in its nascent stage, the government will likely take the steps necessary to eliminate shortcomings and ensure that the logistics industry can achieve its full potential with the aid of the e-way bill mechanism.
Avalara is an experienced application service provider (ASP) and partner of authorized GST Suvidha Providers (GSPs). To understand how our cloud-based application, Avalara TrustFile GST, can help you with GSTR-1 to -9, as well as e-way bill creation, contact us through https://www1.avalara.com/in/en/products/gst-returns-filing.html.