How the e-way bill will help plug revenue leaks

The rollout of the e-way bill has been deferred multiple times due to technical issues with the portal’s hardware and software

The Indian government has been concerned about tax evasion for decades, and no less so since the implementation of the Goods and Services Tax (GST) reform. Now, in an effort to curb tax evasion and stop revenue leaks under GST, the government has introduced the e-way bill.

What is the e-way bill?

The e-way bill is an electronic bill that companies will soon be required to file when goods valued at more than Rs 50,000 are being shipped inter-state or intra-state. Companies can generate e-way bills from the GST network (GSTN), which is managed by the National Informatics Centre (NIC), the contractor responsible for developing the e-way bill portal. Every registered taxpayer will be required to dispatch an e-way bill along with goods shipped or transferred.

On March 8, the government relieved taxpayers of some of the financial burden stemming from e-way bill requirements. The limit of Rs 50,000 will now apply to individual consignments, and not to the total value of consignment, which was the case before this amendment. Another welcome change is that the Rs 50,000 limit will now be calculated after reducing the value of exempted goods.

How will the e-way bill help?

Generating an e-way bill will automatically trigger information about the Return of Outward Supply to update on the supplier’s GSTR-1 form. Online reporting of document inspection and verification is expected to further ensure a unified, compliant environment. Under the previous tax regime, officials manually cross-checked information in tax returns to verify whether consignments came within the taxable net. The current e-way bill system is expected to ensure quicker and more accurate scrutiny of the entire value chain, thereby reducing potential revenue leaks.

Also, a single e-way bill for the movement of goods throughout the country is expected to save tons of paperwork and sidestep various interstate clearances for buyers, sellers, and transporters. The previous tax regime was much more complex, as each state framed its own rules for the movement of goods.

From the industry’s perspective, the outlook may be a little less rosy. The industry is concerned whether this new system will impose stops for trucks, slowing transport times and delaying delivery timelines that had begun to improve with GST’s elimination of checkposts. Adding to the industry’s concern, the logistics sector has yet to organize and get up to speed with the new e-way bill system.

Future of the e-way bill

The rollout of the e-way bill has been deferred multiple times due to technical glitches with the portal’s hardware and software. However, dwindling GST revenue in January and February alarmed the government, spurring them to push for a speedy implementation of the bill.

From April 1, it is compulsory for taxpayers to issue e-way bills for all inter-state transport, meaning taxpayers must have registered under the e-way bill system by March 31. The government has allowed until June 1 to devise a mechanism for intra-state movement of goods.

All eyes now lie on NIC, as its IT infrastructure will play a significant role in whether the e-way bill system is a success. Though the government is hopeful for positive outcomes, many expect the new requirements to increase the burden of compliance for taxpayers. Avalara has stepped in to help ease this burden by offering a simple, automated method that will allow taxpayers to combine e-way bill generation with GST return preparation and filing.

We, along with taxpayers in India, await the implementation of the e-way bill with crossed fingers, as the industry continues to come to terms with a GST return filing mechanism that has proven more complicated than anticipated.

Author is Harshad Shinde, Product Manager, TrustFile GST, Avalara

Source: Moneycontrol, GSTN.in