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The Impact Of Integrating Fastag With E-Way Bills

  • Nov 19, 2019 | Divita S Gupta

As the December 1st, 2019 deadline for compulsory electronic toll collection by way of FASTag draws closer, the number of FAStags being issued is seeing a steady rise. Earlier in 2019, the Government of India announced that all lanes at toll stations on national highways would be converted to 'FASTag lanes' starting December 1st, 2019.  Some states like Tamil Nadu have already announced the successful completion of this conversion. 

Nearly 59 lakh FASTags were issued by the Government in September 2019 alone. FASTags use Radio Frequency Identification technology for making toll payments directly from a prepaid or savings account linked to the tag. This tag is affixed on the windscreen of vehicles and lets them pass through toll plazas without halting for cash transactions. The Government expects to curb annual losses worth Rs.60,000 crore caused due to delays at toll stations by usage of FASTag.

In a monumental decision that will hopefully change the logistics landscape in the country, the Government announced the integration of FASTag and the GST e-way billing system. This will require a joint effort between Delhi-Mumbai Industrial Corridor Development Corporation’s Logistics Data Bank (LDB) services and National Highways Authority of India’s FASTag mechanism. In October 2019, a Memorandum of Understanding (MoU) was signed between the Indian Highways Management Company Ltd. (IHMCL) and Goods and Services Tax Network (GSTN) for expediting this process. This integration will help revenue authorities track the movement of transport vehicles thereby ensuring they are travelling to the same destination specified on the e-way bill. It is also being seen as a way to curb tax evasion as the integration will help increase operational efficiency of supply chain management companies. 

Let's understand how this linkage will come into play. 
E-way bills are a legal requirement if an organisation wishes to transport goods that are over Rs 50,000 in worth from one state to another. Currently, e-way bills are linked to Logistics Data Bank (LDB) services of the Delhi-Mumbai Industrial Corridor Development Corporation (DMICDC). Already in use for FASTag, the LDB uses Radio Frequency Identification (RFID) technology to provide container tracking services by integrating multiple information nodes across various agencies and issuing that information on e-way bills. The Government is also considering the integration of FASTag with other entities including a linkage with fuel stations - this will allow vehicles to refuel without having to pay the fuel franchise in cash. 

How does this impact supply chain management and GST? 
Linking the e-way bill with FASTag and LDB will improve operational efficiencies - it will be easier to track the movement of goods using SMS alerts at each toll plaza. This will ensure that goods and vehicles strictly move toward their specified destination. Additionally, any dishonest trader who take advantage of the loopholes in a supply chain (mainly smuggling contraband) will be unable to carry out their operations. This integration is also expected to help boost tax collections by curbing trade that currently exists solely on cash transactions. With measures taken to bring tax evasion in check, the country multiplies its chances of climbing up the ladder on the Ease of Doing Business Rank. 

The move for integrating FASTags with the e-way billing system comes after a decline in GST collections over the last couple of years. Government officials have been openly voicing the need to tighten the noose around tax evaders by shoring up revenue and raise compliance and strict anti-evasion measures. 

Additionally, following an impressive performance in 2018, India has climbed up 14 spots on the Ease of Doing Business Global Ranking Index and stands at rank number 63 this year. The Government is keen on breaking into the top 50 countries under this index by 2020. Needless to say, easy and hassle free transportation, logistics and supply chain management are key elements that will help improve India’s globally approved ranking. 

The integration of FASTags with the e-way billing system could prove to be a significant milestone in India’s journey toward becoming a globally approved business and logistics hub. Club this integration with the increased use of automation in GST return filing and generation of e-way bills by businesses and India could very well be on its way to becoming a digitally transformed nation. 

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 GST compliance automation, contact us through https://www.avalara.com/in/products/gst-returns-filing 

For more information on GST and E-Way Bill Compliance, visit www.avalara.com


Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.