E-Way Bills Must For Inter-State Goods Movement From Feb.1

E-way bills or electronic invoices will be needed to move goods between states two months earlier than planned as the apex body of India’s new nationwide sales tax felt the need to plug loopholes to boost revenue.

E-way bills—generated on the Goods and Services Network portal— will be compulsory from Feb. 1 for inter-state movement of goods, according to a statement issued after a meeting of the GST Council held via video-conference today. This will bring uniformity and allow seamless inter-state transfer of goods, it said.

The nationwide e-way bill system will be ready for a rollout on a trial basis by Jan. 16, when traders and transporters can start using it voluntarily, the statement said. The council allowed flexibility to choose any date before June 1. for making the electronic document compulsory for goods movement within states.

“The fair balance for mandatory inter-state e-way bill compliance from Feb, 1 will have to be maintained," Abhishek Rastogi, partner at law firm Khaitan & Co., said.

The compliance will reduce tax evasions but may pose some problems for businesses in movement of goods. The government should check the system thoroughly so that there is no disruption in movement of goods.

Abhishek Rastogi, Partner, Khaitan & Co

The government should make it clear whether mandatory intra-state e-way bills from June 1. will be applicable for supplies which are out of the GST ambit, he said.

Disruption Fears

Transporters fear that the e-way bill may cause disruption, especially for smaller companies. “Implementation will be a huge challenge for the transportation companies who may or may not have the manpower and network to manage this transition. Particularly for those who are in less than truckload movements (not fully loaded) due to trans-shipment,” Shashi Kiran Shetty, chairman at Allcargo Logistics, said. “This will put a lot of pressure on trucking companies especially the small & medium ones.”

Goods worth more than Rs 50,000 require an e-way bill if transported for more than 10 kilometres, according to GST rules. In a meeting on Oct. 6, the council had decided that e-way bills would be introduced in a staggered manner from Jan. 1, and will be rolled out nationwide from April 1. Revenue shortfall prodded the council to review the timeline.

The GST revenue for October stood at Rs 83,346 crore, the lowest compared to the first three months since the new indirect tax regime was implemented. The government’s Nov. 27 statement had cited postponing e-way bills as one of the reasons for the shortfall as it hurt tax compliance.