What is the issue?
E-way bill proposed by GST council is complex to understand and posing a challenge to the industry.
How tariff issues are addressed by GST?
- Under the VAT system many states collected VAT on subsequent sales and imposed entry tax and a road permit system.
- Under GST, this problem is addressed to a large extent, through an elaborate online reconciliation mechanism on GSTN.
- It is the objective of GST to remove all non-tariff barriers, such as check posts, entry tax etc. so that the smooth movement of goods across states is ensured.
- This would ultimately reduce the prices of commodities.
What is e-way bill?
- The e-way bill can be electronically generated (on the government portal) either by the supplier or recipient of the consignment, before the movement of goods.
- The transporter needs to carry an electronically generated way bill, with every consignment having value exceeding INR 50,000.
- It may possibly subject to few exemptions such as agricultural commodities
- There are indications that it could come into effect from October 1, 2017.
- Till then, the states have been allowed to follow their own way bill/road permit system, including the ones used prior to GST.
What are the complexities with e-way bills?
- The e-way bill, once generated, is valid for one day for consignment up to 100 km and then one additional day for every 100 km thereafter.
- If e-way bill is generated, but the goods are not transported then it has to be cancelled electronically.
- If the transporter transfers goods from one vehicle to another in the course of transit, then he will be required to generate a new e-way bill, before commencement of the movement.
- Transporters may be required to obtain a unique Radio Frequency Identification Device (RFID) and get it imbedded on the vehicle and map the e-way bill to the RFID prior to the movement of goods.
- It is important to note that e-way bill is required even in case of intra-state movement (beyond 10 km), which was not the case earlier.
- Also, there were many states which did not have a system of way bill or a road permit in the erstwhile regime.
What are the issues with E-way bill?
- The industry is sceptical that this could result in Inspector Raj and the associated corruption, which GST was otherwise supposed to eliminate.
- There is a fear that the e-way bill system could undo reduction in commodity prices
- The GST rates are uniform across states against this backdrop, e-way bill would serve limited purpose.
- The mechanism proposed requires a certain level of maturity in terms of technology, systems and processes.
- Large proportion of transport sector is still unorganised and may not be equipped to deal with technology-led compliances.
- It appears to be too stringent in terms of the reporting requirement.
Source: Business Standard
