E-Way bills & Indian Logistics Industry
Due to complex tax structure in India e-way bills launched by government, the transport industry ends up spending approximately 50% of its time and resources meeting tax compliance, and close to 20% of its time is spent by the trucks standing at inter-state check points to keep track and perform inspection as per report by ministry of road transport and highways.
Indian logistics industry needs some reforms to be as good as developed countries because a truck in India covers per year average distance of 90,000 km as compared to 1,60000 km in developed countries.
With the introduction of GST is expected that it will help companies decrease the number of warehouses also expected to simplify the complicated logistics industry in India. The changes achieved by GST are expected to solve one of the most significant problems this sector has – the cross state transportation of goods without the hassle of documentation and long waiting time at check posts. The GST Council and CBEC’s address to this problem through E-way Bills which will work as replacement of the waybills and other bills that transport companies use today.
Compliance required for E-Way bills
Meeting compliance has been the for the Indian logistics industry for some time now. The waybills obtained currently from VAT authorities are known for restricting movement of goods inter-state wise. E-way bills should help in free-stream of goods, but it does not mean that transporters don’t need to follow rules any more. The CBEC has already released a detailed guideline on the use of e-way bills which is mentioned as below:
- Whenever the mode of transport of a consignment is changed, the transporter or the E-way bill generator has to update the changed vehicle number for unrestricted movement.
- E-way bills generated for goods not transported must be canceled within 24 hours. They can’t be canceled if verified on movement of goods.
- The system will assume the, bill has been accepted if no alternate correspondence is provided within 72 hours from recipient who has to accept or reject the bills.
- The person-in-charge must convey certain documents, for example, the invoice or bill of supply for verification.
- The transporter similarly can convey the details of the e-way bill on a Radio Frequency Identification Device.
- Physical verification of the consignment should also be possible if there is any case relating to avoidance taxes or other malpractice related to this. Otherwise, goods once verified can continue uninterrupted through the rest of the journey.
- Officers conducting the verification would need to present a report of inspection within 3 days of verifying a consignment.
E-way bills will be time bounded as described below: A table below with the proposed validity of e-way bills for different distances:
|Less than 100 kms||1 day|
|100 kms to 300 kms||3 days|
|300 kms to 500 kms||5 days|
|500 kms to 1000 kms||10 days|
|1000 kms or more||15 days|
E-way bill for a distance of 1000 kms is valid only for ten days from the date it is generated.The average speed of Indian truck drivers is 30-40 km/hour, and the average distance covered per day is 250-350 kms. Whereas in developed countries the average speed of 60-80 km/hour and daily distance of 500-800 kms that truck drivers cover and the problem becomes apparent. Hope GST and e-way bill will solve these problems to some extent.
Impact of E-Way Bill on Logistics Industry
Let us throw some light on the effect of e-way bill on the logistics industry. The e-way bill recording promises better revenue utilizing the benefits of Information Technology. It is additionally expected that the E-way bill mechanism would be an effective instrument to track movement of goods and check tax avoidance and will ensure that goods being transported follow the GST Law. The E-Way Bill promises multiple benefits for the transporters.
The Advantage of e-way Bills
The state-wise documentation which is currently required for movement of goods will not be required any further. Another advantage which transporters are going to observe is the establishment of RFID device in the vehicle used to transport consignments. The person in-charge of the vehicle will not be required to convey physical copies going forward as the device is attached to the vehicle and the e-way bill can be synchronized and verified through the device itself.
Faster movement of Consignment
Another huge advantage of E-Way Billing will be the removal of the large number of check-posts on the state borders and national highways, resulting in faster and smoother movement of goods.
Reduced Logistics Cost
E-Way Bill mechanism would ensure proper invoicing and which would reduce tax avoidance for any consignments being shipped. In the longer run this bill will help to reduce the Logistic cost, and ultimately contribute more in GDP. In our country logistics cost is very high when compared with other countries.
Disadvantage of e-way Bills
However there are some bottlenecks which have been problems with logistics industry in India. There seems some disadvantages of e-way bill too along with many advantages being quoted:
Problem may be seen for small transporters especially from small cities in securing access to GSTN gateway to generate the e-way bill. The government is now facing big challenges of ensuring that all transporters big or small from rural or urban areas do have access to internet even in a crisis situation. If an organization does not have the IT system to generate e-way bills in real time, it will be a huge problem.
Different timelines in states
Till now 15 states have notified the implementation of e-way bill from February 1, 2018 but rest of the states have not notified as yet there implementation of e-way bill timeline. Maharashtra and West Bengal have decided to defer, which is creating confusion for the businesses which have inter-state operations, as there is no clarity over this situation from government as of now.
There are stake holders like e-commerce retailers who use several modes of transportation to ensure goods reach the customers on time from the warehouse or the manufacturer’s. Since a new e-way bill must be generated every time the mode of transportation is changed e-com will definitely end up generating a huge number of bills for every shipment they do.
Potential delays in e-way bills generation
Sometimes customers may cancel orders even while the goods are moving, or return goods already purchased. Fresh e-way bills have to be generated each time this happens as per existing guidelines. This poses an issue for e-commerce retailers who use outside transport support. They can only be able to generate e-way bills after the transporter transfers details on the GSTN, which can cause potential delays in shipment.
Overall, we find that there are expected positive effect of e-way bill on Indian logistics sector and furthermore loopholes in the realization of the vision of the e-waybill. At this juncture when the e-waybill is in the genesis stage, it will be too soon to reach on conclusion with reference to whether the advantages of e-waybill outweigh disadvantages or vice-versa.