A universal tax regime is expected to improve India’s notoriously poor record in moving goods. Transporters have their doubts. They fear online transit bills under the Goods and Services Tax will not only make it worse, but costlier as well.
While the GST Council will take up electronic way bills in its June 18 meeting, concerns stem from the onerous draft rules. They call for strict deadlines and stipulate the minimum distance a truck must cover in a day. A delay or a change of vehicle will result in cancellation and the trucker will have to generate the bill afresh. And it applies to transfer of goods worth more than Rs 50,000 within or outside a state.
The rut of re-generating e-way bills will only prolong the delivery cycle, said MS Mani, senior director, indirect tax, Deloitte India. “Why should the government care whether a vehicle is covering 100 km in a day or not? As long as tax invoices are correct, this should be an agreement between the supplier and his customer.”
Truckers in India lose 60 percent of transit time at road blocks, tolls and other stoppages, pushing logistics costs up to three times higher than global benchmarks, according to World’s Bank’s 2014 India Development Update. The impact of GST can be enhanced if check posts are systematically dismantled, allowing goods to move efficiently throughout the country, it said.
Transporters said the draft rules will not help achieve that objective and will only increase costs for small suppliers and transporters, especially because the e-way bill has to be generated at every change of vehicle.
A registered supplier will have to generate an online bill by entering details of a consignment on GST Network’s portal, the technology backbone of the new tax. If the goods are handed to transporters, they will generate the e-way bill based on information provided by consignor. The number will have to be validated within 72 hours.
Such bills will be automatically cancelled:
if the vehicle breaks down or is detained and the trucker is not able to furnish details within 30 minutes;
if the vehicle does not reach its destination as per the timeline provided in the draft rules;
if the transport of goods does not begin as per the details mentioned on the portal within 24 hours of generating the e-way bill number.
If a driver encounters any problem on the road, he must use the GSTN portal to update, Archit Gupta, founder and chief operating officer of ClearTax, a tax filing portal, told BloombergQuint. This works on the assumption that drivers for small and medium transporters will have the understanding and internet connectivity on the road, he said.
The draft rules also stipulate the time a truck should take to deliver a consignment based on distance. Say, if the validity for 100 km is one day, for 300 km it will be three days. Every time the validity is breached, a new bill will have to be generated.
This is not practically feasible as the roads are not the same throughout the country, said Chandrakant Tiwari, director, TCM Haulers, a transport company. There will be an issue if a vehicle breaks down in an area with poor internet connectivity, he said.
The government has based the draft rules on the existing e-way bill requirements in states such as Karnataka, Andhra Pradesh and Uttar Pradesh. Suppliers and transporters have made representations seeking a change in the rules.
Complying with these rules will be time-consuming and costly for suppliers and small transporters, said Santosh Dalvi, partner-indirect tax, KPMG India. One can only hope that the government comes out with a better alternative, said Dalvi.
Mani of Deloitte suggested an option. One way would be to increase the validity of the bills to a month and instead of a radio frequency identification device, a GPS-enabled smart card with details of the consignment could be swiped at different checkpoints, he said.
A final decision is yet to be taken. “The implementation of e-way bills may even get delayed due to compliance challenges faced by the transport and logistics industry,” said Dalvi.