Given how companies are yet to come to grips with GST, the planned launch of the e-way bill for inter-state shipments from February 1 is premature. The bill, pushed back earlier, has now been brought forward because the government believes there is too much evasion. There is no denying the evasion, but how much of a difference will the bill make and how much damage will this cause to businessmen already weighed down by onerous GST compliances? In its defence, the government claims VAT collections increased by 15-20% post the imposition of e-way bills in most states. While there is no guarantee the inter-state e-way bill will result in the same jump in collections, at this point, the risk of inspectors misusing their powers to coerce and extort money from assessees seems to be high. Since the rollout of the GST has been far from smooth, as is evident from the several simplifications that have been made, the government could have desisted from any additional measures at this stage. It is no one’s case that companies are even half compliant. For instance, if one looks at the July-September returns under the ‘composition’ scheme, they show how approximately six lakh firms paid a total tax of just Rs 250 crore. Assuming a blended tax incidence of 2% of turnover, this implies an average turnover of Rs 2 lakh for the quarter or Rs 8 lakh annually—but since firms that have a turnover of less than Rs 20 lakh don’t even need to pay GST, it is obvious most are dramatically under-stating their revenues.
But, what if, after the e-way bill, this rose a massive ten times? Revenues would rise by Rs 2,250 crore every three months compared to the current GST run-rate of around Rs 85,000 crore each month—can that justify the e-way bill? The government must focus on the big picture; get big traders and businessmen to file invoice-level data regularly to ensure they are not getting away by paying less taxes since this is where the bulk of revenues come from.
At this stage, letting loose inspectors could seriously disrupt business. Since the die is cast, however, it is important the government ensures there is minimal harassment. While the idea is to ensure no goods travel without e-way bills, the checks have to be truly random and kept to a minimum; and detailed checks of trucks to match their contents with the e-way bill have to be even fewer. And, since even a brief stoppage of a truck is enough to demand a bribe, or for such an allegation to be levelled, it may be a good idea to video-record each stoppage of a truck. And, if the system is periodically reviewed at a senior level, it can be revamped if need be—just as the GST Council tweaked GST rates and rules.