GST e-way bill: Old wine in a new bottle
The future is here, but it is much inspired by the past, a case in point being the e-way bill.
The nationwide e-way bill system, rolled out on 16 January on a trial basis, will help businesses and transporters to get a hang of the new mechanism that becomes mandatory in a fortnight.
From 1 February 2018, all interstate movement of goods worth more than Rs50,000 will require securing an e-way bill through prior online registration of the consignment. The e-way bills system for intra-state movement of goods will be implemented from 1 June 2018.
Wary of declining goods and services tax (GST) revenues, the government hopes to plug tax leakages by implementing the e-way bill system. It’s a concept that is unique to India. Globally, businesses continue to rely on an invoice for transporting goods, which is mostly in an electronic format. This invoice, issued by the seller, acts as proof of sale and the transporter is required to carry a copy of it, say tax experts.
In India, an e-way bill was being used by businesses even in the pre-GST era. In fact, way-bill/entry tax as it was earlier called has been in existence in certain states for over two decades now, i.e., from the days of service tax and value-added tax (VAT).
According to tax experts, the way-bill was issued by VAT authorities in the form of a printed booklet only to those businesses/dealers who were regular taxpayers. However, manual issuance of way-bill booklets resulted in harassment by tax authorities and boosted corruption, so a few years ago states like Karnataka and Andhra Pradesh computerized it. That is how the way-bill became electronic.
There are around 10 states where e-way bills are already being used. In fact, e-way bills have been given different names in different states. “For instance, it is called e-sugam in Karnataka, e-Transit pass in Uttarakhand, e-Road Permit in Jharkhand and Bihar, Challan Inward/Outward in Sikkim. In the Union territory of Puducherry, e-way bill will be introduced for the first time,” said Archit Gupta, founder and chief executive officer of ClearTax, an online tax services firm. Under GST it will have a uniform name and format, but the original concept has been modified.
For instance, the e-way bill will be valid for a specific time only, unlike in the erstwhile tax regime. Another differentiating factor is that a seller can issue bulk e-way bills in case of multiple consignments worth more than the threshold, which was a tedious task in the VAT regime.
A key positive is that businesses will now have to deal with a standardized e-way bill form for transporting goods across the country, unlike in the earlier system where different forms had to be filled for transporting goods to different states. What remains unchanged is the objective—keeping a check on tax evasion by tracking the movement of goods.
Some tax experts say the government could have devised a better technique to check revenue leakages instead of burdening the entire system with these e-way bills, which they fear may act as a hindrance to the seamless movement of goods.
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