Already grappling with the Goods and Services Tax transition, businesses are now anxious about how the roll-out of e-way bills will pan out. Starting February 1, all inter-State movement of goods worth over ₹50,000 will be tracked with the introduction of the e-way bill system under the GST regime. All consignments moving more than 10 km from their origin will require prior registration and generation of an e-way bill through the GST Network, which will be valid for varying durations depending on the distance travelled. While a few States have already imposed their own requirements for such bills since the GST roll-out in July, all States must implement the bill system for capturing intra-State trade by June 1. Therefore, a fully integrated tracking system for all taxable goods can be expected only then. This poses an interim headache for firms operating across States, as they will now face differing compliance requirements for inter-State trade and intra-State trade, depending on when individual States launch their own e-way bill systems. To be fair, inter-State movement of goods was also tracked under the VAT (value-added tax) regime, but intra-State transactions were not. Over 150 items of common use, including LPG cylinders, vegetables, foodgrain and jewellery, will be exempt from such transport permits, which can be checked by designated tax officials by intercepting a transporting vehicle. Goods moved on non-motorised conveyance, such as carts, have been left out.
In October, the GST Council had decided to introduce e-way bills in a staggered manner from January 1, with a nationwide roll-out on April 1, 2018. After easing the GST burden on small businesses and exporters in its recent meetings, the GST Council’s decision on Saturday to advance the implementation of e-way bills just two days after polling closed in Gujarat signals that there are serious concerns on the tax collection front. After a monthly ₹90,000 crore-plus inflow in the GST’s first three months, revenue in October plummeted to just over ₹83,000 crore. And this was even before substantive tax rate cuts made by the Council kicked in. With States claiming a revenue shortfall of about ₹40,000 crore so far under the GST, the Centre, which has to fill that gap, is also feeling the pinch. Finance Minister Arun Jaitley, who faces a serious fiscal dilemma even before he presents the Union Budget in less than two months, has said the next set of GST features, such as e-way bills and matching of invoices, will make tax evasion difficult and bump up collections. Plugging revenue leakages is essential, and encouragingly, Karnataka’s e-way bill experience in the first month saw very few glitches. Given industry’s nervousness, the government must simplify the onerous rules proposed for e-way bills (a one-day validity for distances up to 100 km, for instance), ensure that the IT backbone is robust, and make inspections the exception, not the norm.