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E WAY BILL UNDER GST India being a federal nation, the Central Government is empowered by the Constitution to levy duties and taxes on the manufacturing and rendering of services. The government in the states are empowered to levy tax on intrastate sale of goods, in which movement of goods happen within state jurisdictions. When the sale of goods involves movement of goods between different states, the Centre is empowered to levy tax on such sales, and the revenue so collected, will be shared by the Centre and the State. While the constitution clearly stipulates the powers to the governments at the Centre and the states, the biggest challenge especially for the states is to monitor the movement of goods – within the state and outside the state. There was rampant evasion of taxes and leakage of revenue to the states. Thus, in order to tackle the tax evasion and misuse of the system, most of the states have multiple check-post along their national highways and borders. These check-posts mainly monitor the movement of goods and ensure that the relevant duties/ taxes have been paid on goods. A person causing movement of goods has to be equipped with various documents like invoice, challan, road permits, way bill, and so on which need to be produced at the check-post for inspection. Current regime Today, various state governments have devised their own system to track the movement of goods within and to outside their borders. For example, some states have necessitated the registered dealer to declare the details of the goods based on the consignment value or as designated/notified goods when they are transported. The documents like the permit form, way bill, among others have to be obtained. Apart from these, certain states mandate the transporter of goods to obtain the transit pass or declaration form. With evolution of technology, there are significant efforts by various states to digitalize the procedures involved in the movement of goods, like the e-Sugam introduced by Karnataka. Under e-Sugam, a registered dealer transporting goods worth Rs.20, 000 or more has to upload the details of the consignment and obtain a unique reference number. This is shared with the transporter and he can then simply quote the number to the officer at check-post. In other states too, a similar mechanism has been introduced which facilitates the registered dealer to electronically declare the details of the consignment and obtain the required forms for the movement of goods. Under GST Under GST, the process and procedural aspects for the movement of goods are prescribed in the e-way bill rules. E-Way bill stands for Electronic Way Bill. It is usually a unique bill number generated for the specific consignment involving the movement of goods. Under GST, a registered person who intends to initiate a movement of goods of value exceeding Rs 50, 000 should generate an e-Way bill. Under GST, a registered person who intends to initiate a movement of goods of value exceeding Rs 50, 000 should generate an e-Way bill. Applicability and generation of e-way bill Questions Answers When is the e-way bill applicable? It is applicable for any consignment value exceeding Rs.50, 000. Even in case of inward supply of goods from unregistered person, e-way bill is applicable. When should I generate the e-way bill? The e-way bill needs to be generated before the commencement of movement of goods. Who should generate the e-way bill? When goods are transported by a registered person, either acting as a consignee or consignor in his own vehicle or hired, the supplier or recipient of the goods should generate the e-way Bill. When the goods are handed over to a transporter, the e-way bill should be generated by the transporter. In this case, the registered person should declare the details of the goods in a common portal. In case of inward supplies from an unregistered person, either the recipient of supply or the transporter should generate the e-way bill. What is the form applicable for generating e-way bill? Form GST INS-1 is an e-way bill form. It contains Part-A, where the details of the goods are furnished, and Part-B contains details of the transporter. Can the e-way bill be generated for consignments of value less than Rs.50, 000? Yes, either a registered person or a transporter can generate an e-way bill although it maynot be mandatory. What happens if multiple consignments are transported in one vehicle? The transporter should generate a consolidated e-way bill in the Form GST INS 02 and separately indicate the serial number of e-way bills for each of the consignment. On generation of e-way bill, will there be any reference number generated? Upon generation of the e-way bill, on the common portal, a unique e-way bill number called ‘EBN’ will be made available to the supplier, the recipient and the transporter. What happens if goods are transferred from one vehicle to another vehicle in the course of transit? Before transferring the goods to another vehicle and making any further movement of such goods, a transporter should generate new e-way bill in Form GST INS 01 by specifying the details of the mode of transport. What happens if the consignor does not generate the e-way bill even though the value of consignment is more than Rs.50, 000? The transporter has to generate the e-way bill in Form GST INS 01 on the basis of the invoice, bill of supply or the delivery challan. What happens if e-way bill is generated but goods are not transported? An e-way bill can be cancelled electronically on the common portal within 24 hours of its generation. An e-way bill cannot be cancelled if it has been verified by an officer during transit. Will the e-way bill be made available for acceptance to the recipient of goods? Yes, the details of the e-way will be made available for the recipient of goods only if he is registered. The recipient of goods should communicate acceptance or rejection of the consignment covered by the e-way bill within 72 hours of the details being made available. What happens if recipient of goods does not communicate the acceptance of rejection within 72 hours? If the recipient of goods doesn’t communicate acceptance or rejection within 72 hours, it will be deemed as accepted by the recipient. Is there a facility to generate or cancel the e-Way through SMS? The facility of generation and cancellation of e-Way bills will be made available through SMS. GST e-way bill generarion Validity of e-Way Bill Distance Validity Period Less than 100 km 1 Day 100 km or more but less than 300 km 3 Days 300 km or more but less than 500 km 5 Days 500 km or more but less than 1000 km 10 Days 1000 km or more 15 Days The validity period will be counted from the time of generation of the e-way bill. The validity period of the e-way bill may be extended by the commissioner for certain categories of goods, as specified in the notification issued in this regard. Documents, inspection and verification The transporter or the person in charge of a conveyance should carry the following documents: The invoice or bill of supply or delivery challan, and A physical copy of the e-way bill or the e-way bill number. At the place of verification, the officer may intercept any vehicle to verify the e-way bill or the e-way bill number in physical form for all interstate and intrastate movement of goods To avoid verification of the physical copy of the e-way bill, a device Radio Frequency Identification Device (RFID) can be fixed to the vehicle and the e-way bill is mapped to the device. At the place of verification, the e-way bill mapped to this device will be verified through RFID readers. For certain class of transporters, fixing of RFID devices to the vehicle and mapping of e-way bill to device will be mandated. This will be notified by commissioner. On the ground of suspicion of tax evasion, a physical verification of the vehicle can be carried out by an officer after obtaining necessary approval from the commissioner or an officer authorized on his behalf. If the physical verification of vehicle is done at one place –within the state or in any other state, no further physical verification will be carried out again during the transit, unless specific information of tax evasion is made available subsequently. After every inspection, the officer needs to record the details of the inspection of goods in Part- A of Form GST INS-03 within 24 hrs of inspection and the final report must be recorded in Part B of Form GST INS 03 within 3 days of inspection. If the vehicle is detained for more than 30 minutes, the transporter has an option to complain by uploading the details in Form GST INS 04. With GST, all the existing state-wise documentation required for movement of goods will be eliminated and the proposed e-way bill will be made common across the nation. Also, it is expected that the number to check-posts across state borders and national highways will be scaled down. This may result in ease of movement of goods.
Conditions for distribution of input tax credit by an ISD The following are the conditions applicable for distribution of input credit by an ISD: 1. An ISD invoice clearly indicating ‘issued only for distribution of input tax credit’, should be issued by the distributor to the recipient of credit. The unit to which the input tax credit is distributed is referred as the ‘Recipient of credit’. The tax invoice should contain the following details; Name, address, and GSTIN of the Input Service Distributor A consecutive serial number containing only alphabets and/or numerals, unique for a financial year Date of its issue Name, address, and GSTIN of the supplier of services, the credit in respect of which is being distributed, and the serial number and date of invoice issued by such supplier Name, address, and GSTIN of the recipient to whom the credit is being distributed The amount of credit distributed, and Signature or digital signature of the supplier or his authorized representative 2. The amount of credit distributed shall not exceed the amount of credit available for distribution. 3. The input tax credit available for distribution in a month shall be distributed in the same month, and the details of the same shall be furnished in Form GSTR -6. 4. The input tax credit should be distributed only to that branch which has consumed the input services. Let us understand this with an example: For example, Top-In-Town Home Appliances Ltd, is located in Bangalore, Karnataka. They also have branches located in Mysore (Karnataka), Chennai (Tamil Nadu), and Mumbai (Maharashtra). The unit in Bangalore is the Head office and they procure common services in bulk which are used by the other branches too. Top-In-Town Home Appliances Ltd (HO) receives an invoice of Rs.1, 00, 000 + GST of Rs.18, 000 towards advertisement services provided exclusively to the Mysore branch. The total credit of Rs.18, 000 will be distributed only to the Mysore branch. 5. The credit of tax paid on input services, availed by more than one recipient of credit or all, should be distributed only amongst such recipients or all recipients. Method of input tax distribution The distribution shall be on pro rata basis based on the turnover for the previous year of such recipients. In the absence of turnover in previous financial year, the turnover of the last quarter of the month in which ITC is distributed, will be considered. Let us consider the above example and understand in detail. Amount of credit to be distributed Rs.90, 000 Number of recipients of credit Mysore and Chennai Aggregate turnover of Mysore unit in previous financial year (PY) Rs.60 Lakhs Aggregate turnover of Chennai unit in previous financial year (PY) Rs.90 Lakhs Aggregate turnover of all recipients of credit Rs.150 Lakhs The credit of Rs.90, 000 will be distributed in the following manner: Distribution of ITC by an ISD Example 6. Any additional amount of input tax credit on account of issuance of a ‘debit note’ by a supplier to the ISD shall be apportioned to each recipient in the same ratio in which the input tax credit contained in the original invoice was distributed. The distribution should be on the basis of method illustrated in Point No. 5 7. In case the input tax credit already distributed gets reduced for any reason, an ISD credit note should be issued for the reduction of credit. The following details have to be captured in the ISD credit note : Name, address, and GSTIN of the ISD A consecutive SL.No containing alphabets or numerals or special characters such as hyphen or dash or slash, symbolized as, “-“ “/” respectively, and any combination thereof, unique for a financial year Date of its issue Name, address, and GSTIN of the recipient to whom the credit is distributed The amount of credit distributed, and The signature or digital signature of the ISD or his authorized representative 8. Any input tax credit required to be reduced on account of issuance of a ‘credit note’ by a supplier to ISD should be apportioned to each recipient in the same ratio in which the input tax credit contained in the original invoice was distributed. The distribution should be on the basis of method illustrated in Point No. 5 9. The reduction amount so apportioned should be: Reduced from the amount to be distributed in the month in which the credit note is included in the return in FORM GSTR – 6 and Added to the output tax liability of the recipient.
Government counter claims handset manufacturers, smartphones to cost less GST has been fixed at 12% for smartphones and medical devices according to sources. Gains are also expected to accrue to packaged cement, which attracts central excise duty of 12.5% and a specific levy of Rs.125 per metric tonne in addition to VAT of 14.5%. Smartphone and medical device manufacturers were proved wrong when the results from the Srinagar conference were declared. Manufacturers had predicted prices of their products to spike but the results show otherwise. Surgical instruments, will see a lower tax burden with the GST rate pegged at 12% instead of the current incidence of over 13%, which includes 6% central excise duty and 5% VAT.
Understanding Input Service Distributor (ISD) in GST It is quite common that businesses have a distributed system of manufacturing units or service rendering units across the nation. In simple words, businesses with Head Offices (HO) and Branch Offices (BO) which are spread across the nation – could be in the same state or a different state. Under this system, in order to have better operational efficiency and control, usually businesses adopt centralized billing for procurement of common services at the HO. This situation leads to the accumulation of input tax credit paid on common inward supplies which are used by the branch units. In order to avoid the aforesaid situation, the concept of Input Service Distributor (ISD) was introduced in CENVAT credit rules, which allows the HO to distribute the input tax credit to eligible units which are engaged in manufacturing or rendering of taxable services. The HO, which does the centralized billing for procurement of common services is termed as the ‘Input Service Distributor’. In order to distribute the credit, the HO has to obtain a separate registration as an ISD, and file half yearly return. As an ISD, the HO mainly performs the following: Receives service tax invoice for availing common input services Distributes the input tax credit to eligible units by issuing an invoice/challan, as required. Input Service Distributor under GST The concept of Input Service Distributor (ISD) is provided in GST too. It is defined as ‘an office of supplier of goods and/or services, which has received input services under the cover of tax invoice, and is allowed to distribute the said tax credit to the supplier of goods and/or services registered under the same PAN’. This indicates that the ISD is an office: Which can be a head office, administrative office, corporate office, regional office, depot, and so on, belonging to registered taxable person who intends to distribute the credit Which receives tax invoices towards the receipt of inward supply of services Which distributes the tax credit paid of inward supplies of services to the branch units which have consumed the services, and issues invoices for the distribution of credit Registration under GST An ISD is required to obtain a separate registration. The registration is mandatory and there is no threshold limit for registration for an ISD. Businesses who are already registered as an ISD under the existing regime (i.e. under Service Tax), will be required obtain a new ISD registration under GST. This is because, the existing ISD registration will not be migrated to the GST regime. Businesses who are already registered as an Input Service Distributor under the existing regime (i.e. under Service Tax), will be required obtain a new ISD registration under GST. CLICK TO TWEET Manner of Distribution Under GST, on an intrastate transaction, CGST and SGST will be applicable. In case of transaction within a union territory, CGST and UTGST will be applicable. IGST will be applicable in case of interstate transactions and imports. The following are the scenarios of distribution of credit by an ISD: ISD and the recipient of credit are located in the same state ISD and the recipient of credit are located in different states The unit to which the input tax credit is distributed is referred to as the ‘recipient of credit’. ISD and recipient of credit are located in the same state When the ISD and recipient of credit are located in the same state/union territory, the input tax credit of IGST, CGST, SGST, and UTGST should be distributed to the recipient in the following manner: GST Input Service Distributor same state *Applicable on transactions within a union territory Let us understand with an example. Top-In-Town Home Appliances Ltd, is located in Bangalore, Karnataka. They also have units located in Mysore, Chennai and Mumbai. The unit in Bangalore is the Head Office and registered as an ISD. They do bulk procurement of common services which are used by the other units too. Top-In-Town Home Appliances Ltd (HO) receives an invoice of Rs.1, 00, 000 with GST of Rs.18, 000 (CGST Rs.9, 000 + SGST Rs.9, 000) towards advertisement services provided exclusively to the Mysore unit. The credit will be distributed as CGST Rs.9, 000 and SGST Rs.9, 000. Recipient of credit and ISD are located in different states When the ISD and the recipient of credit are located in different states/union territory, the input tax credit of IGST, CGST, SGST, and UTGST should be distributed to the recipient of credit in the following manner: GST ISD For example, Top-In-Town Home Appliances Ltd (HO) receives an invoice of Rs.1, 00, 000 with a GST of Rs.18, 000 (CGST 9, 000 + SGST 9, 000) towards advertisement services provided exclusively to the Chennai unit. The credit of CGST Rs. 9, 000 and SGST Rs. 9, 000 will be distributed to the Chennai unit as IGST, Rs. 18, 000. Return Forms under GST Return Type Frequency Due Date Details to be furnished Form GSTR-6A Monthly 0n 11th of succeeding month Details of inward supplies made available to the ISD recipient on the basis of FORM GSTR-1 furnished by the supplier Form GSTR-6 Monthly 13th of succeeding month Furnish the details of the input credit distributed The concept of ISD in GST is similar to the provisions existing under CENVAT credit rules and Service Tax.
E-Way bills may not be the best solution for small transport companies . As per the new tax reforms, Movement of goods worth more than 50, 000 will require the generation of E-Way bills. The generation will be initiated prior to the consignment via online registration. The entire process of bill generation shall include detail uploading on the GSTN portal. The supplier and the receiver can then be identified with the help of a unique e-way bill number. A new bill has to be generated by the transporter if the goods are transferred from one vehicle to another. The transporter needs to indicate the serial number of e-way bills generated in respect of each consignment when multiple consignments are to be considered. Although, the process seems to have no frills attached, it's a rather complicated one. There is no provision for a condition where goods carrying trucks suffer a break down. Also, technology cannot be relied on completely. Revenue secretary Hasmukh Adhia says that ample time will be given to the transport companies to adjust to the changes.
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