Logistics companies will suffer for 3300 crore entries in a year for uploading e-way bills

eway bills in gst pic

The express delivery industry is very optimistic that with roll out of GST the overall cycle time would reduce and the considerable logistics costs in the Indian economy would come down.

However, the transportation industry and express industry and its users in particular are very concerned on the Government’s proposal mooted for movement of goods with requirement of e-way bills. This would potentially negate the savings hoped for, and in fact would lead to increase in logistics costs and delays. At a time when India’s Logistics Performance Index(LPI) ranking has started looking up, it improved 19 places in 2016, the introduction of e-waybill as proposed has potential to to seriously erode our LPI rankings.

Users of express delivery services would face considerable disruptions to their businesses in the way e-waybill is being introduced.

The Express Delivery Services (EDS) offers door to door, time definite services. EDS sector employs over 2 million people and has huge potential for substantial job growth. EDS mainly carry large number of small packages from varied industries like electronics, auto components, textiles and garments, handicrafts, urgently needed aircraft parts, medical equipment as well as products of micro exporters in the B2C segment.

Speed is the differentiator in comparison to other modes of transport and delivery time is generally measured in hours instead of days. The very nature of operations using the hub and spoke model entails multiple transshipments  as well as multiple modes of transportation including air, road and rail.

The e-waybill proposed by the government entails that the transporter logs into the GST network and generate an e-waybill for providing vehicle number right from the time your shipment is picked up and then continue to generate e-waybills each time a vehicle is changed until the shipments are delivered to your consignee.

On average nearly 3 crore shipments are handled daily by the express delivery industry alone. And a typical delivery cycle would entail that the shipments are on average transshipped 3-4 times. Each time a shipment is transshipped to a different vehicle the transporter will have to log into the GST network and generate e-waybills. This would mean over 9 crore entries in a day which would translate to about 3300 crore entries in a year to be done by the express industry alone. And if all segments of transporters are taken into account it would mean billions of entries in the GST network all to ensure vehicle numbers are captured.

Added to this is the proviso to restrict validity of the e-waybills generated based on distance.

Massive obligations before conveyance of goods is supposed to be fulfilled by express companies which is practically impossible for them to do. This will lead to huge costs and delays in the global supply chains, making India inefficient in transaction costs for international trade and lower its logistics competitiveness ranking.

Currently a few States in the country require an e-waybill to be generated while crossing state borders. However, these are not generated as soon as shipments are picked up. They are generated for cross border movements while crossing from one state to another and is nowhere on a scale to what is proposed

The complexity and disruptive nature of the proposed e-waybill arises due to requirement of vehicle numbers to be filed multiple times, from first mile i.e when the shipments are picked up from the shipper’s address and for each subsequent change of conveyance in the case of multiple movements, that is typical of EDS providers, until the last mile which is delivery at the consignee’s address.

Instead of e-way bill it would have been better for the government to have required that the Goods consignment note (also known as Airway bill or Lorry receipt) is filed in the GST network. The Consignment notes are unique in identity and are tracked by the EDS provider end-to-end until the shipments are delivered. This will also negate the need for any validity based on distance since the tax authorities will know status of shipment in each leg.

Instead of creating a system which would substantially delay delivery of shipments and thereby destroy value in the system as well as push up our logistics costs and inefficiencies, it would be better if the GST network creates a system which can realize its objectives by risk profiling and using the existing track and trace systems of the transporters.

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