The Transportation & Logistics (T&L) is the backbone of the Supply Chain ecosystem. In India, this industry is projected to grow at 9-10%1 per annum from $115 bn to $360 Bn by 20322,, a study suggests. However, this projection will hold ground only if the industry is able to quickly adapt to the changing taxation landscape in the country, E-way bill compliance in particular.
Till date, with road transport being the preferred mode for 60% of the cargo movement in the T&L industry, the logistics industry was spending 50-60%3 of its time on tax compliance, inter-state checkpoints maneuvering, scrutiny, and tracking of inter-state sales tax, etc. So, a new ecosystem using technology was designed for the logistics industry based on the GST (Goods and Services Tax) framework to reduce the overall time spent on tax compliance.
With the lack of system readiness and slow adoption issues by Small and Medium Enterprises (SMEs), the GST council deferred the GST return filing of GSTR2 and GSTR3. In the current GST era, the existing GST forms – GSTR1 and GSTR3B – do not support the invoice-matching requirement, due to which the tax authorities are unable to keep a check on under-invoicing, actual movement of goods, and inflated input tax credit claims. With no co-relation present between invoices and actual movement of goods, there is no mechanism available today for the government to plug tax evasion. This has also contributed to the decline in actual tax collection against the budget.
To keep tax evasion under check and better monitor trade, GST Council has decided to launch the E-way Bill, a solution for better management.
The proposed bill is the first step towards linking the E-way bill information with transaction data in GST return to equip authorities with trade level intelligence and minimize tax evasion.
So, how does this new E-way bill solution impact the business world?
Stepping into the Digital Future
The logistics industry needs to navigate from their current challenges of insufficient integration between the transport network, information technology, warehousing, and distribution facilities, and step into the digital future.
Real-time information is critical in setting up the digital business. The E-way bill is a solution to connect all parties of the value chain to one ecosystem – suppliers, transporters, and recipients – to track the movement of goods and check tax evasion. Establishing a direct linkage between what is declared and what is moved, and having a check on manual, repeat data entry in the entire value chain paves the way for efficiencies in the logistics industry. But implementation of these changes brings substantial challenges for the ecosystem.
Possible roadblocks in the way of E-way Bill implementation:
Similar to the experience with GST portal, taxpayers face availability issues while connecting to the National Informatics Centre (NIC) portal during peak business hours for E-Way Bill processing. However, unlike GST return filing, delay in E-Way bill processing directly affects the movement of goods which can lead to loss in business. Thus, real-time access to NIC’s system for E-Way bill operations is critical for taxpayers and the portal should not be the only channel to rely upon. Also, concerns over security issues relating to data exchange over the internet are impacting business operations.
Corporates with substantial transaction volumes can avoid error-prone manual operations and associated overhead costs with process automation and through integrated access to NIC over different channels. Using end-to-end processing, corporates can integrate their E-way bills data to the invoices raised in their ERP systems and track the movement of goods to optimize the overall efficiency of the value chain.
API-based E-way Bill Solution– a Game Changer
APIs are going to be the key drivers in the digital economy. Corporates with an integrated systems strategy will be able to leverage real-time data in the most consumable way and gain a significant competitive advantage.
API based E-Way Bill compliance solution allows speed in exchange of data, live data reporting, real-time data integration, and data security, thus improving the overall customer experience. Generating e-way bills online becomes fairly easy. The government has also selected numerous GSPs (GST Suvidha Providers) across the country to help traders with their e-way bill filing requirements.
For example, with E-Way Bill API calls directly set up between the corporate’s ERP systems and NIC’s E-way Bill System, corporates can directly exchange their data and send bulk invoices through a GST Suvidha Provider to E-way Bill System. With end-to-end automation in the E-way bill processing, data can be extracted directly from their ERP systems with all data validations processed without any human intervention, and data pushed straight out to the E-way Bill System.
The E-way bill solution is here and corporates need to quickly adopt it into their ecosystem for a faster and transparent ecosystem, all for the better of the transport sector. Are you ready?
- ICRA Report http://www.thehindubusinessline.com/