New Delhi: Federal indirect tax body the Goods and Services Tax Council on Saturday decided to make electronic permits compulsory for inter-state movement of goods from 1 February, replacing the transit pass systems followed by individual states.
The urgency with which the Council is introducing the e-way bill system implies that the absence of this electronic goods movement system is being seen as one of the factors behind lower than expected tax compliance and falling monthly GST revenue collections.
In October, the Council had said that the e-way bill system will be introduced in a staggered manner from January 2018 and will be rolled out nationwide from April to give enough time for businesses to adopt it. Now, it is compulsory for inter-state movement from February, two months earlier.
In November, central and state governments collected a total Rs83,343 crore (for the sales reported in previous month), compared to the revenue collected in October of over Rs92,000 crore as per initial estimate. With the recent tax cuts in the top slab of 28%, receipts could further suffer in coming months.
“The situation is very grim. GST as a reform lost its sting in the absence of e-way bills,” said S.P. Singh, senior fellow at transport research body, Indian Foundation of Transport Research and Training (IFTRT), which has been demanding the e-way bill system to ensure accountability and tax compliance. Singh said that the transit pass system followed by states in the absence of a national e-way bills system was inefficient.
An official statement from the GST Council said e-way bill system will help in seamless movement of goods across state borders. It will be available on a trial basis for voluntary adoption by businesses from 16 January enabling tax authorities to check instances of under-valuation of goods.
As far as intra-state movement of goods is concerned, states have time till 1 June to implement the national e-way bill system. The Council wants the system to cover the entire movement of goods—within and across states— from June.
The Council had earlier said that till the time a national e-way bill system is introduced, states could continue with their own electronic permits or other modes of monitoring goods movement. States had removed border check posts from 1 July.
The e-way bill system will work as an electronic surveillance of factory output and inter-state commerce which yield data on consumption of goods that is useful in policy making. However, businesses’ actual ease of managing logistics will depend on how liberal will be the finer aspects of its rules.
According to Abhishek Jain, tax partner, EY, the e-way bill system once implemented would help the government check evasion of taxes but would add to the compliance burden of tax payers.
The Council’s statement said that states were earlier authorized to continue their own separate e-way bill systems till the national e-way bill system is ready. “However, it was represented by the trade and transporters that this is causing undue hardship in inter-state movement of goods and therefore, bringing in an early all India system of e-way bill has become a necessity,” said the statement issued after the Council meeting.
Muralidharan, senior director, Deloitte India, said that the national e-way bill system will help businesses as it would be the same across the country. It will also leave an electronic trail of goods movement for the authorities to track, he said.
Pratik Jain, leader, indirect tax, PwC India said it is important to ensure that all states have common e-way bills and that suggestions from industry for simplification are taken into consideration.