The government fears lack of monitoring of cargo movement could have allowed cash dealing across the entire value chain to evade taxes, which could have been reason for the sharp decline in GST collections in past two months.
Nationwide launch of the eway bill from February 1 is expected to check evasion by ensuring goods are tagged and tax paid, a government official said. It could not be rolled out earlier as software and nationwide system was not ready.
Businesses with turnover up to Rs 1 crore — limit is raised to Rs 1.5 crore now —are allowed to file tax based on turnover and not maintain detailed records. Rate of tax is 1% on manufacturers, 2% for traders and 5% for restaurants.
Assuming an average tax of 2%, calculation yields average turnover of about Rs 2 lakh for six lakh composition scheme filers for first three months considering the Rs 250 crore tax payment. Since that would be below the Rs 20 lakh threshold for filing returns, most of these assesses should not have filed tax. “There seems to be massive under reporting in the composition scheme,” the official said.
This also means that GST revenues will not get a boost from composition filers who are required to file returns every quarter.
The GST Council has decided to start eway bill for inter-state movement of goods from February 1 while states have up to June 1. Eway bill is an electronic document that is required if goods worth more than Rs 50,000 is transported and carries the details of supplier, buyers and goods being transported. There have been fears the bill will lead to harassment as any cargo would be stopped for checking.
“Asking traders and transporters to generate E-way Bill on-line and carry it, is not ‘Inspector Raj’; it is just ”efficient use of Information Technology.” Let us all prepare for Feb 1 deadline for e-way bill for inter-State transportation of goods,” finance secretary Hasmukh Adhia tweeted.