GST Council Meet: E-Way Bills From 1 April, Exporters Relieved

The e-way bills will be generated in a phased manner, starting with states that will be divided in four categories.

The Centre hopes to complete the rollout of intra-state e-way bills by April end as stated by Finance Minister Arun Jaitley.

(Photo courtesy: whatsupme.com)

Starting 1 April, the inter-state movement of goods worth Rs 50,000 will need generation of e-way bills, the GST Council decided in its 26th meeting on Saturday, 10 March.

Generation of e-way bills for movement of goods within a state will be adopted in a phased manner, starting with states to be divided into four categories, Finance Minister Arun Jaitley said at a press briefing on Saturday.

The Centre hopes to complete the rollout of intra-state e-way bills by April end, Jaitley added.

In a press release, the Finance Ministry said a date for introduction of intra-state e-way bill system will be announced “not later than 1 June.”

The group of ministers, tasked with overseeing the Goods and Services Tax information technology framework, had made these recommendations to the council. The electronic tracking system is meant to be an anti-tax avoidance measure by ensuring that suppliers logged and tracked goods between and within state borders.

After the portal that was to generate e-way bills crashed on 1 February – the earlier date for implementation – the generation of such invoices was deferred.

About 9.5 lakh taxpayers have registered on the e-way bill portal, and around 6.5 lakh e-way bills are being generated daily as part of the trial runs.

Bihar Deputy Chief Minister Sushil Modi, who heads the GoM, had said last month.

Only procedural issues were discussed, Jaitley said after the meeting in which GST return filing system and inclusion of extra neutral alcohol and aviation turbine fuel were discussed but no concrete decision taken.

Simplifying Return Filing

The current system for returns filing will be extended for three more months, the council decided. The GoM will continue to interact with IT experts to try and find a way to simplify the system further, the finance minister said.

Two models of return filing have emerged in the last two to three months, Haseeb Drabu, Finance Minister of Jammu & Kashmir, told reporters.

The political executive in some ways is more comfortable with the Nandan Nilekani model, as it’s a simpler model, but the tax administration thinks it will lead to larger evasion.

Haseeb Drabu, J&K Finance Minister

Kerala Finance Minister Thomas Isaac explained, “Nilekani’s model had proposed that buyers and sellers would settle between themselves, following which credit would be given. But it can result in delay of credit and other serious issues.”

Relief for Exporters Extended

Tax exemption for exporters has been extended by six months to 1 October “by which time an e-wallet scheme is expected to be in place to continue the benefits in future,” the Finance Ministry said in a separate press release.

The GST Council also reviewed the progress in grant of refunds to exports of both Integrated GST and input tax credit, the release added.

The Council directed GSTN to expeditiously forward the balance refund claims to the Customs/Central GST/State GST authorities, as the case may be, for their immediate sanction and disbursal, according to the Finance Ministry’s statement.  

The GST Council, in an earlier meeting, had decided that exporters will get quicker refunds and an e-wallet facility amid worries that a prolonged disruption could hurt the sector. The Council had also decided that exporters will pay a nominal Integrated GST rate of 0.1 percent on merchant exports till 31 March.

Exporters get a refund of taxes paid on inputs and shipments. They were worried that working capital could remain stuck for long after the government extended the deadline to file returns, delaying refunds.

Besides, the reverse charge mechanism, in which large entities are required to pay taxes on purchase from unregistered smaller companies, has been extended by three months, said Jaitley.

While deferment of reverse charge mechanism for purchases from unregistered suppliers is a welcome move, the GST Council should consider completely scrapping such a draconian provision.

Abhishek Rastogi, partner at law firm Khaitan & Co, in an emailed statement

"Two separate writ petitions on this issue are scheduled to be heard on 14 March and the constitutional validity of this provision will be tested in Delhi High Court," he added.

(This article was first published on Bloomberg Quint)