e-Way bills: rules and compliance regulations

The e-way bill is an electronically generated document that businesses in India are required to file when moving goods worth more than Rs. 50,000 from one place to another. Each e-way bill must contain detailed information about the goods being transported.

As of April 1, 2018, it became mandatory to file e-way bills for the movement of goods interstate. The government has yet to announce an effective date for creating e-way bills for intrastate movement, but it’s expected to be no later than June 1, 2018. 

The government hopes the e-way bill system, once fully implemented, will act as a powerful deterrent to tax evasion by capturing every movement of goods.

Implementation status

As of April 24, 2018, the following states have implemented the e-way bill system:

E-way bill benefits

The government expects the new e-way bill system to provide several benefits. The old method of having inspectors physically interface with those transporting goods is giving way to a new system of digital interfacing that will result in the elimination of state boundary check-posts.

Ultimately, the digital interface system will facilitate a faster movement of goods, improve the turnaround time of trucks, and help the logistics industry by allowing for an increase in the average distances travelled. All of these benefits will reduce travel time as well as travel costs.

Perhaps the biggest benefit of the new e-way bill system is its use as a powerful monitoring tool for the government to check for tax evasion.

E-way bill challenges

The new e-way bill system is expected to face a few challenges. Analysts report that because states have been given the power to implement their own e-way bill rules, if states prepare different rules from each other, than uniformity within the system — the very purpose for which it was intended — will be lost.

Because the entire e-way bill system will be dependent on technology, if, or when, technical glitches arise, all transport could come to a standstill. Government and businesses have already experienced technical glitches with the e-way bill system, which resulted in the deferment of the e-way bill’s implementation.

Finally, there are many smaller businesses transporting goods who may not be tech savvy, and therefore may find it challenging to abide by the e-way bill provisions.

Clarification of important terms

• Movement vs. supply

The e-way bill is required for all transactions involving the movement of goods, whether in the course of supply or not. 

• Transport vs. delivery

Movement is a part of transportation, which commences as soon as the consignor hands over the goods to be delivered to a specified location, whereas delivery takes place when the title is transferred.

• Place of delivery vs. place of supply

The e-way bill requires businesses to mention the place of delivery, which could be different from the place of supply as defined in the Goods and Services Tax (GST) Act.

Who is required to generate e-way bills?

Every registered person who causes movement of goods with a consignment value exceeding Rs. 50,000, including:

1. In relation to a supply. For example, for the purpose of sales.

2. In relation to goods treated as “supply of services,” such as the leasing of goods.

3. For reasons other than supply. For example, a branch transfer.

4. Due to inward supply from an unregistered person.

Circumstances requiring businesses to generate an e-way bill

Goods transported by road

If the consigner is a registered taxpayer, they are responsible for generating an e-way bill. If they are not registered, then generating the e-way bill becomes the responsibility of the consignee or the person transporting goods.

Goods transported by air, railways, or water vessel

The e-way bill must be generated by the registered person being the supplier or the recipient.

Documents required to generate e-way bill

In order to generate an e-way bill, a consigner should be prepared with the following information:

• The invoice, bill of supply, or delivery challan

• Transporter’s ID (if transporting by road)

• Vehicle number

• Transport document number and date of document (if transporting by rail, air, or water vessel)

Documents required during transit

While transporting goods, the transporter is required to have the following information:

• The invoice, bill of supply, or delivery challan

• A copy of the e-way bill form and e-way bill number

Validity of an e-way bill

An e-way bill shall be valid for the period mentioned below, starting from the date on which it’s generated:

Non-applicability of an e-way bill

A business is not required to generate an e-way bill in the following circumstances:

1. When transporting goods by a non-motorised conveyance.

2. When transporting goods from a customs port, airport, air cargo complex, or land customs station to an inland container depot (ICD) or container freight station (CFS) for clearance by customs.

3. When transporting goods under customs supervision or under customs seal.

4. Goods that are transported under a customs bond from ICD to a customs port, or from one custom station to another.

5. Transit cargo transported to or from Nepal or Bhutan.

6. When the Ministry of Defence moves goods as a consignor or consignee for defence formation.

7. When a consignor transports goods between a place of business and a weighbridge for weighment, up to a distance of 20 km and accompanied by a delivery challan.

8. If the consignor of goods is the central government, state government, or a local authority transporting goods by rail.

9. When goods are specified as exempt from the e-way bill requirements in the respective state/union territory GST Rules. 

10. When transporting empty cargo containers.

11. When transporting alcoholic liquor for human consumption, petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas, or aviation turbine fuel.

12. In respect to specified goods like jewellery, personal and household products, etc., which are mentioned in this list.

While it does have its benefits, the e-way bill is yet another GST complexity for businesses to manage. Automation helps relieve some of the strain. 

Avalara, an experienced application service provider (ASP) and partner of authorized GST Suvidha Providers (GSPs), provides tax automation solutions for businesses in India. To understand how our cloud-based application, Avalara India GST, can help you with GSTR-1 to -9, as well as e-way bill creation, contact us through https://www1.avalara.com/in/en/products/gst-returns-filing.html.