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Practitioners of Goods and Services Tax (GST) from across the country have formed a Joint Action Committee (JAC) to suggest simplification in compliance and filing of returns as well as to ensure that money (of businessmen) is not blocked in the form of refunds due to them. The JAC was announced on Sunday, when the two-day national conclave of tax practitioners concluded in Ahmedabad.
The committee was formed to fill the gap of a nation-wide body to represent to the authorities the issues faced by businessmen and tax practitioners at the grass-root level. “GST is a national Act, which subsumes most of the Acts governing states and central taxes. There is no way local tax practitioners can represent their cases to GST Council. Such a national body is the need of the hour,” said Amit Dave, a tax practitioner from Indore.
Close to 200 delegates from 29 states and Union Territories participated in the conclave. Representatives from each state will be a part of the JAC. A core body within JAC will also be formed to coordinate the activities of JAC.
The conclave witnessed deliberations on a host of issues, and suggestions to simplify the system will be submitted to the GST Council. “The upcoming meeting of GST Council has suggested 46 amendments, the conclave deliberated on a wider range of issues. We were surprised with the kind of issues faced under GST in different parts of the country,” said Axat Vyas, one of the key organisers of the conclave.
Some of the major suggestions include single one-click monthly return, allowing rectification in returns and creation of an activity log for traders to trace their actions, among a host of others. The Conclave also deliberated on short comings of the Act.
Participants complained that the GST portal is not uniform across states and while it is functional in some states, it’s dysfunctional in neighbouring states. Deepak Bapat, a tax practitioner from Maharashtra, said that the IT system is not robust enough and the Act is in place. “All commissioners are given an authority to extend the deadline to file taxes by three months, but they have never used this discretion,” said Bapat. Sreedhara Parthsarthy, a tax practitioner from Ballari, in Karnataka, advocated that traditional tax practitioners should also be allowed to audit GST returns. Under the GST regime, only Chartered Accountants and Cost Accountants are allowed to conduct audit reports.
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In the age of digital disruption, a measured approach needs calibration
The rise of tech start-ups designing new services and digital consumers demanding hyper-personalized, better experiences have driven the infusion of advanced digital technologies in consumer-facing industries. In some instances, consumer demand has been supported further by regulatory changes, leading to technology-led business model innovation.
The growth of digital banking is a case in point. Traditional, asset-heavy industries that form the core of the economy, on the other hand, are yet to witness similar transformative changes. They are taking a slow and steady approach, piloting digital initiatives in a piecemeal manner, and investing in digitalization at the edges, while keeping their core business model or processes unchanged.
While taking a measured approach has its merits, in the age of digital disruption it needs constant calibration, failing which it could lead to billions of dollars in lost opportunities. Research done by the World Economic Forum and Accenture finds that the metals and mining industry could unlock $400 billion in value with the use of digital, and the oil and gas sector could unlock $4.5 trillion. Similar financial gains are in store for other industries.
Contrary to the widely-held perception, asset-heavy industries are not always protected from disruption despite significant barriers to entry. While they may not face big-bang disruptions common to consumer businesses, they do face the threat of compressive disruption, reflected in declining profitability with the slow and prolonged erosion of revenue and operating profits. Our research reveals that from 2007 to 2015, globally, companies in slow-moving industries saw operating margins fall from 12.9% to 9.5%.
Closer home, the textiles and apparel industry is a reference point. Even though the industry has grown at a compound annual growth rate (CAGR) of 13.5% between 2009 and 2017, growth in production volumes have stagnated since FY14. Textile exports have experienced similar stagnation, shrinking by 1.1% CAGR in the three years since FY14. The textiles and apparel industry is losing out not only to Chinese large-scale manufacturing, but also to competition from much smaller Asian peers such as Bangladesh and Vietnam. Competitive advantages are fast eroding as Indian manufacturers are unable to keep pace with their peers when it comes to digitally-enabled process automation.
It is not that asset-heavy firms are not investing in digital. Ninety-six percent of more than 900 companies that Accenture spoke to in 21 markets in 2017 said they view digitalization as a strategic tool and are investing in it. However, only 13% admitted to getting the desired results. Further analysis showed that a part of the problem is too much of a focus on trying out new technologies and experimenting with new areas of impact in a fragmented manner. In India, there was a disproportionate focus of firms using technology to drive new growth, ignoring profitability gains through operational efficiency.
That’s where the gap is. In asset-heavy sectors, much of the value is trapped around core processes; making them state-of-the-art could have a significant impact on companies’ bottom lines.
Another research, based on a study of 343 leading global companies across eight industries, showed that only 6% are able to couple broad levels of digital investment with commensurate business success, or are what we call “digital high performers”. The ones that succeed are worth noting: they achieve this by having a clear and meticulous focus on the transformation of the core business and growth in the new. They overcome the innovator’s dilemma and the fear of cannibalizing profits to launch new business models. Thus, they achieve 44% higher revenue growth and 34% higher profitability, even when compared to companies that are embracing digital in fairly advanced ways.
The convergence of maturity curves for major technologies such as artificial intelligence, quantum computing and blockchain presents an exceptional opportunity to businesses. The right combination of these technologies could lead to financial gains far greater than what each technology would deliver on its own. The time to act is now.
The growing Indian economy has led to expectations of 11-12 per cent growth in the domestic apparel market in the next seven years, said a study conducted by the apex industry body the Clothing Manufacturers’ Association of India (CMAI).
“India’s domestic apparel market was estimated at $67 billion in 2017 which had grown at a compounded annual growth rate (CAGR) of 10 per cent since 2005. Owing to strong fundamentals, India’s domestic apparel market size is now expected to grow at 11-12 per cent CAGR and reach about $160 billion by 2025,” said Rahul Mehta, President, CMAI, while inaugurating the 67th National Garment Fair, India’s largest apparel trade show currently being held.
The four-day business-to-business (B2B) fair houses 916 exhibitors in 986 stalls displaying 1,087 apparel brands in a 650,000 square feet area. The fair displayed leading brands in men’s wear, women’s wear, kid’s wear and accessories.
“India’s domestic market has performed better than the largest consumption regions like the US, EU and Japan, where depressed economic conditions led to lower demand and growth,” said Mehta.
The domestic apparel industry is dominated by ready-to-wear category with its market size of around $56 billion, with an 84 per cent share which is further growing at a CAGR of 10-11 per cent. The ready-to-stitch market is also gaining momentum as more and more men who have been buying premium or luxury readymade clothing brands want to wear a shirt or a trouser that fits them perfectly. The ready-to-stitch market, currently at $11 billion, is expected to grow at a CAGR of 7 per cent and reach about $20 billion by 2025.
Premal Udani, Managing Director, Kaytee Corporation, a kids’ wear apparel manufacturer and exporter, said that apparel exports had taken a beating from October 2017 onwards.
“The introduction of the goods and services tax (GST) had resulted in non-refund of several embedded taxes. Consequently, apparel exports for the financial year 2017-18 (FY18) declined by 4 per cent to $16.7 billion from $17.38 billion in the previous year,” he added.
The downturn continues in FY 2018-19 with a month-on-month decline of 10 per cent. The government is seized of the matter and has assured that embedded taxes will be refunded through the drawback route.
Readymade garment exports (RMG) in the first three months of current fiscal (April to June) declined by 16.57% to Rs 27,103 crore as compared to Rs 31,594 crore in the same period of last fiscal.
Hit hard by rising cotton prices coupled with issues such as GST as well as reduction in duty drawback rates and return on state levies, the readymade garment exports (RMG) in the first three months of current fiscal (April to June) declined by 16.57% to Rs 27,103 crore as compared to Rs 31,594 crore in the same period of last fiscal.
After reporting a 8% decline in FY18 exports to Rs 1,07,679 crore, the exports of readymade garments continued to witness fall of 21.40% in April, 12.59% in May and 7.8% in June to Rs 8,860 crore (Rs 11,272 crore earlier), Rs 9,041 crore (Rs 10,343 crore earlier) and Rs 9,203 crore (Rs 9,980 crore earlier), respectively, according to an industry data for the first three months of current fiscal. In dollar terms, the decline in April, May and June 2018 was at 22.78%, 16.57% and 12.45%, respectively.
According to industry sources, the beleaguered knitwear export sector has been passing through a challenging business environment further to implementation of GST and this could be apparently witnessed from the continuous declining of knitwear exports on a month-on-month basis since October 2017 after three months transition period got over and the declining of exports for the second half yearly period of 2017-18 was 21%. The most worrying factor is that the negative trend in exports growth is continuing in the current financial year also.
Haryana Agriculture and Farmers’ Welfare Minister, OP Dhankar on Monday said that farmers of the state will get a benefit of about Rs 6,000 to Rs 18,000 per acre after Central Government approved a steep rise in the minimum support price of crops, giving farmers the promised 50 per cent return on input costs.
Apart from this, compensation amounting to Rs 3,257 crore has so far been given to farmers during the tenure of present State Government to make farming a risk-free venture, said Dhankar while talking to the mediapersons here.
He said that increase in minimum support price (MSP) of crops as approved by the Central Government would benefit the paddy farmers of Haryana with Rs 6,000 per acre, cotton farmers with Rs 8,000 per acre and bajra farmers with Rs 7800 per acre.
Due to the increase in MSP, Haryana would get Rs 1500 crore which includes Rs 1200 crore for paddy and Rs 300 crore for other crops, said the Minister.
Spelling out the achievements of his Department, the Minister said that the State Government has given compensation of about Rs 491 crore to farmers under Fasal Bima Yojana. Compensation amounting to Rs 6,000 to Rs 12,000 per acre has been given to farmers through Revenue and Disaster Management Department.
During 2015, Rs 1092 crore was given for wheat crops and Rs 276 crore for cotton crops. Apart from this, the compensation amounting to Rs 268 crore pending from the tenure of the previous government was also given to farmers by the present State Government, he added.
When asked about the number of farmers benefitted from crop insurance schemes, he said that more than three laks farmers of the state have been benefitted.
He further said that the present Central Government has been increasing the MSP of crops from time to time as a result of which the average income of farmers has reached up to Rs 11,000 per acre.
The farmers of Haryana have got enhanced income of Rs 7,335 crore, he added.
Dhankar also said that 54 mandis in the state have been linked with e-NAM. The crops not procured by government are being purchased through e-NAM. Apart from this, new mandis are also being developed.
The largest mandi of the country to set up over 600 acres in Gannaur, would be constructed through special purpose vehicle for which approval has been given by the Cabinet, he said.
The Minister added that Haryana’s first flower mandi would be set up with the assistance of Netherlands over 8.62 acres in Sector 52, Gurugram.
He said that apple mandi has been set up at Sector 20, Panchkula and in order to further expand it, there is a provision to set up new and modern apple mandi over 75 acres land of HMT, he added.
About the problem of burning of crop residue, Dhankar said that a sum of Rs 65 crore was spent on prevention of crop residue burning. As many as 6338 farmers were given agricultural equipment for disposal of crop residue last year. This year, equipment for this purpose would be given to 5563 farmers and 900 groups for which a budget of Rs 150 crore has been earmarked, he added.
He also said that 2863 hectare saline and waterlogged land of 14,282 farmers have been reclaimed with a sum of Rs 21 crore. This year, a target has been set to reclaim 2,186 hectare land of over 2,100 farmers, he added.
Kenya is banking on the modernisation of Rivatex factories and the adoption of high-yielding seeds to revive the ailing cotton sector.
Through the upgrade, whose cost will add up to Sh3 billion by the end of the year, the textile firm targets to spur production from the current one tonne of lint, equivalent to 6,000 metres, to over 12 tonnes or 40,000 metres of finished products in a day, according to the firm.
Rivatex currently consumes 10 bales of cotton daily, but this is expected to increase to 70 bales once the modernisation of the equipment is complete.
Kenya wants to take advantage of the global markets such as the African Growth and Opportunity Act (Agoa) to change the fortunes of the sector. Under Agoa, goods of more than 6,000 product lines, mainly textile and apparel, accounting for 65 per cent of the total exports, are granted quota and duty-free access to the US market.
Kenya ranks among the top suppliers of apparel to the US, having exported $340 million (Sh3.4 billion) worth of goods to the market last year.
Kenya’s total exports to the US under the Agoa plan peaked at Sh35.2 billion in 2015, before declining to Sh32.7 billion last year, according to the Economic Survey data.
Kenya is yet to fully exploit this opportunity to revive the cotton industry. But the government says this is now changing with Investment and Industry Principal Secretary Betty Maina, noting that the ministry has already rolled out initiatives to return the sector to its glory days. She called on farmers to start growing the crop again.
“If you have a parent or relative who was growing cotton but gave up, tell them to grow the crop because we are reviving this factory. We hope to double and expand the production in the coming years,” she said.
Kenya has also set sights on growing genetically modified cotton on a commercial scale, which experts say will be a game-changer. This follows the recent approval by Nema for BT cotton trials.
President Uhuru Kenyatta in January said he was betting on the sector to create 50,000 jobs and generate Sh20 billion, especially in apparel export earnings, this year as part of his final-term economic revival plan.
Treasury Cabinet Secretary Henry Rotich said the government allocated Sh1.2 billion in this year’s budget to promote the development of the crop and encouraged farmers to take advantage of a ready market to grow the crop.
Kenya produces 30,000 bales of cotton annually against spinning capacity of about 10,000 metric tonnes of lint. To bridge this gap, Kenya imports from Uganda and Tanzania. PS Maina said the government is committed to creating a ready market for textile products.
“The President last year promised all products for the police, NYS and military will be sourced locally and military and other public agencies should be exposed to the products,” added the PS.
Rivatex used to produce millions of tonnes of fabric before it was placed under receivership in 2000 following massive mismanagement. In 2007, Moi University bought the firm but has been struggling to produce finished products due to obsolete equipment.
The upgrading of the firm will cost Sh3.016 billion after the company secured a grant from the Indian government for technology transfer and purchase of new machines. The loan was extended to the country following the visit by Indian Prime Minister Narendra Modi to Kenya in 2017.
Indian High Commissioner to Kenya Suchitra Durai, who was present at the event, observed that modernisation of the factory will result in more than 2000 direct jobs. “Our partnership with Kenya and Moi University through Rivatex also involves capacity building by taking managers and some workers to India who are being trained at LMW Ltd and this will ensure that the factory will produce quality products,” noted Ms Durai.
Many years ago, I did my doctoral research on the environmental compliance of Bangladesh’s readymade garment industry at the London School of Economics and Political Sciences. Back then, the industry was beginning to make its mark with their American and European buyers. They were demonstrating their newly found confidence at delivering cheap and basic clothes in a “fast fashion” supply chain. The foreign buyers were price-setters and controlled who participated in the global apparel supply chain. Their collective codes of conduct were the rulebook and governed the quality of the product, how it was made, how it was shipped, and how social and environmental issues were to be addressed by the garment companies along the way.
Years later, I was back at my alma mater to talk about a very different garment industry. This article is based on what I presented at the Bangladesh Summit hosted by the LSE and the UC Berkeley.
The Economist magazine recently said that it’s a good time to be celebrating Bangladesh’s economy right now. Bangladesh is no longer a disaster story. Bangladesh is not a basket case.
Gross domestic product grew steadily at 6 percent in the past decade, with the last two years’ growth being around 7 percent. Industrial share of the GDP is 29 percent, and the lion’s share of that comes from the garment industry.
The garment industry has about 4,000 active factories, employing 4.4 million workers, 80 percent of whom are women. In a conservative society like Bangladesh, that is a remarkable story.
The sector has spawned backward and forward linkage industries, and estimates indicate that about 50 million Bangladeshis depend on the apparel sector for a living.
Garment exports stood at $28 billion in the fiscal year of 2016-17, and globally Bangladesh is second only to China in apparel export volumes.
Like in any part of the apparel supply chain, compliance management has been a challenge in Bangladesh as well. In the 80s, sweatshop-like conditions and child labour were a sad reality. In 2012 and 2013, Bangladesh was the stage for the most horrific industrial accidents the world has seen: Tazreen factory caught fire, killing 112 workers and the Rana Plaza building collapsed, killing 1,134 workers. These tragedies shook the entire supply chain and buyers, governments, international development agencies, factory owners, labour groups, NGOs and trade bodies all rallied together.
Now the Unicef says that children are no longer employed in the garments factories (although child labour is prevalent in informal economic work and in murky corners of the sub-contracting supply chain). The International Labour Organisation and buyer groups – the Accord and the Alliance – in the past five years have inspected all garment factories and remedied them for building and fire safety. A large number of factories have shut down, some have moved, and some are still taking corrective action.
About $1 billion has been invested by factory owners to ensure better working conditions. The buyers now say that working conditions are a lot better and non-compliant factories no longer exist in Bangladesh. The workplace conditions are still not ideal and one can say with some certitude that there is a long way to go to maintain the standards rigorously.
Bangladesh’s compliance history is no doubt checkered and spotted. But it is also the stage for some not so quotidian achievements. According to the United States Green Building Council, Bangladesh is home to some of the world’s most environment-friendly apparel factories.
The world’s highest-rated green denim, knitwear, washing and textiles mills are all in Bangladesh. Of the top 11 LEED Platinum-certified factories, eight are from Bangladesh.
So far, 67 garment factories have achieved LEED certification. Of them, 17 are platinum rated and 37 gold rated. Some 280 factories are under process for LEED certification.
But it’s just not the 300-odd LEED superstars. The garment sector is accelerating its greening and becoming known for its sustainability initiatives. It is home to the Partnership for Cleaner Textile (Pact), the world’s largest apparel resource efficiency programme. The Pact Phase-1 was implemented in 215 factories at a cost of $11 million. The Phase-2 has just been launched and will reach another 250 factories at a cost of $7 million.
While eco-friendly development remains a desideratum, the $28 billion question is how do we go from LEED and PACT success stories to transformational change that will ensure Bangladesh’s place in a green supply chain? Green technology involves hardware and operational knowledge and can range from large and complex technologies to simpler ones. Typically, cleaner production faces two kinds of barriers: economic and institutional. Garment factory owners will think about the economic viability of the suggested green tech, the capital availability, and the risks to their company’s main objectives of profit maximisation.
PACT and LEED results are critical at this point of breakthrough because they reify the eco-efficiency business case that fuels peer demonstration. Success stories in more than 400 factories present compelling case studies of what is possible through constructive dialogue, collective effort and technical advisory. The business case will act as a catalyst towards greening in many factories once the “super stars” become the norm.
In order to enhance peer learning and investment into cleaner production, Bangladesh’s garment factories specifically need strong regulatory signals favouring cleaner production (targets and regulatory measures), long-term institutional changes (not just availability of green loans, but ease of access and disclosure of disbursements), economic incentives to banks, financial institutions and factory owners, removal of perverse resource pricing, and collaborative and coordinated efforts to foster networks of greening, skills building, trust building and behavioural change.
This list is not exhaustive, nor it is reflective of the complexity of the problem, but it starts a new way of thinking about spreading greening in a city that is also one of the most-polluted in the world. We must transcend from being islands of greening to more uniform performance, and learning how to do that from those which perhaps might be a better way.
India has seen its trade deficit with China quadruple in the past decade – from $16 billion in 2007-08 to nearly $63 billion in 2017-18 – despite its best efforts to increase exports and reduce the imbalance.
Can India now take advantage of the ongoing US-China trade war to step up exports as Beijing explores the possibility of expanding trade ties with emerging economies to make up for the loss of US market?
The US-China trade war has thrown up export opportunities for India, but there are challenges to harnessing those opportunities, say experts.
Over the last few months, the Donald Trump administration has put up tariff barriers to Chinese exports worth more than $250 billion, provoking the latter to hit back with retaliatory tariffs on key American exports like cotton, soybean, maize, chemicals and petrochemicals.
Experts say India can fill China’s demand-supply gap for products like cotton, sugar, groundnut, groundnut meal, oilmeals, chemicals and petrochemicals where it has exportable surplus.
The Chinese market is now going to be very lucrative for Indian cotton exporters, said M.J. Khan, chairman, Indian Council of Food and Agriculture, a leading farm sector policy think-tank.
India exported goods and commodities worth $10.17 billion to China in 2016-17, and out of this cotton accounted for $1.34 billion, or 13% of total exports.However, cotton exports to China declined to $1 billion in 2017-18, as per data available with the commerce ministry.
China has imposed a 25% tax on US imports of cotton, and shipments from India are consequently expected to see a boost this year.
“India is already world’s largest cotton producer and it can further increase acreage of the commodity if it gets to replace US exports to China,” Khan told The Wire.
India can also increase sugar exports to China. India made a strong pitch to export sugar to China after the Wuhan informal summit between Prime Minister Narendra Modi and China’s President Xi Jinping in April this year.
Indian sugar mills are sitting on a surplus stock of seven million tonnes and they are looking for an opportunity to reduce it.
Following the summit, representatives of 25 Chinese sugar companies attended a close-door meeting with top functionaries of the Indian Sugar Mills Association (ISMA) to explore possibility of importing 1-1.5 million tonnes of sugar.
Soybean conundrum
China has imposed additional tariff of 25% on soybean, chemical products, and medical equipment imported from the US but reduced tariffs on many agricultural products including soybean from its Asia Pacific Trade Agreement partners comprising India, Sri Lanka, Bangladesh, South Korea and Laos.
However, India does not have exportable surplus of soybean and so it is not in a position to take advantage of disruption in US supply of the commodity to China.
That said, Indian industry hopes to export $100 million worth of soybean meal and about $50 million of groundnut to China on the strength of its new competitiveness. Currently, India does not export any soybean oil or flour of soybean but sends negligible amount of oilcake obtained from soybean oil extraction to China. Groundnut exports attract a 15% duty in China.
However, the industry fears non-tariff barriers could spoil their export prospects. The reason is that Chinese are not used to Indian food products. So it would be a challenge for the Indian industry to increase exports of agriculture products like meals to China.
India can also increase its export of oil-meals to China. India exported oil-meals worth Rs 4,758 crore in 2017-18, a 48% jump over the preceding year, according to the Solevent Extractors’ Association (SEA).
This figure is likely to go up this year.
India does not have a big surplus of maize either. For example, Indian maize export in 2016-17 was valued at just $153 million. Major destinations were Nepal, Bangladesh, Sri Lanka, the Philippines and Yemen.
The US is the second-biggest soybean supplier to China after Brazil. Soybean is most important for American farmers as China is the world’s biggest importer. The US is also the world’s biggest maize exporter, though its maize farmers do not rely on the Chinese market in the same way as soybean exporters.
Khan fears that the US could try to divert its surplus output of soybean and maize. If that happens, the Indian poultry sector, which uses soybean and maize as feedstocks, will benefit from cheaper availability of these commodities.
However, farmers could face the brunt of this tactic and might need increased subsidies to survive, warned Khan.
India’s major chemical exports to China are p-Xylene (para-xylene), o-Xylene (ortho-xylene), benzene, ethylene glycol, linear low density polyethylene (LLDPE), dyes and pigments.
Lower tariffs would further consolidate India’s share of the Chinese import market.
India has been pushing China to further open its market for Indian exports like agriculture commodities, IT and pharmaceuticals. During the India-China strategic dialogue in April and the Wuhan informal summit, India made a case for higher export of agriculture commodities and pharmaceuticals to China.
New System for filing returns, rationalisation of tax slabs and legal changes of the structure will top the agenda of the GST council meeting but will skip bringing natural gas under ambit of GST.
New System for filing returns, rationalisation of tax slabs and legal changes of the structure of GST will top the agenda of the GST council meeting which is scheduled to be held on July 21, but will skip bringing natural gas under the ambit of GST.
“There will be some legal changes in the structure of GST to facilitate the taxpayers. The government has already got an in-principle approval from the council and its draft will be presented during the council meeting on July 21,” a senior finance ministry official said without divulging any further details.
Apart from that the next council meet will focus on the simplified tax return system. The government has already hinted to launch the Single page GST filing form by the end of this year. Before the launch the GSTN will do a trial-run of the software.
Rationalisation of tax slabs also features in the GST meet agenda.
“There will be many items which will be brought under the lower tax slab. Also the council is also proposing to reduce one tax slabs,” the official said. The items which is expected to be under lower tax slab is sanitary napkins, biscuits and certain handloom items. The GST Council has So far reduced rates on 328 items since launch.
However sources have ruled out the proposal of bringing natural gas under the ambit of GST.
“Even when there are talks on bringing natural gas under GST, it is unlikely to happen in this meeting. The ministry is yet to do a proper assessment of its implication of the revenue, before going ahead with the move. I think people have to wait for some more time before it happens,” the official added.
The government is planning to allow zero return filers have to file on quarterly basis.
“The plan is to take such tax payers into the quarterly cycle of filing their returns, where they can submit the return by just opting for no transaction report.
In the first year of GST, the government earned Rs 7.41 lakh crore from the tax since its roll out in July. The average monthly collection was Rs 89,885 crore. In the current fiscal, the collections in April touched a record Rs 1.03 lakh crore, followed by Rs 94,016 crore in May and Rs 95,610 crore in June.
The GST Network has floated a request for proposal for service providers who can automate the process of calculating the distance between two PIN codes within the e-way bill system
In a taxpayer-friendly move, the government said the distance between two PIN codes for a shipment will be calculated automatically at the time of generation of an e-way bill under the goods and services tax (GST).
This is expected to reduce discrepancies in e-way bills generated by transporters, which not only lead to queries from tax officials, but also in generation of an e-way bill.
The GST Network, the information technology backbone, which, along with the National Informatics Centre, manages the e-way bill system, has floated a request for proposal (RFP) for service providers who can automate the process of calculating the distance between two PIN codes within the e-way bill system. The last date for submission of bids is 26 July. The RFP requires the service provider to complete the entire process within two-three weeks of the project being awarded.
An e-way bill, an electronic documentation of movement of goods, was rolled out primarily as an anti-tax evasion measure to prevent non-reporting or under-reporting of transactions. It has to be generated for all movement of goods within or outside a state through online registration of a consignment. The supplier and the transporter can upload the details about the shipment and get a unique e-way bill number.
While an e-way bill has to be generated for movement of all goods between states valued at over ?50,000, the threshold varies from state to state.
At present, taxpayers are asked to enter the two PIN codes, the starting point and the end point of the shipment, and then asked to fill the distance.
“The taxpayers or transporters, knowingly or unknowingly, may enter the distance wrongly and, hence, it results in loss of time. It also makes transporters further clarify the details to the verifying office,” the RFP said. The validity of an e-way bill is linked to the distance between the two locations and, hence, this move will cut down on human errors. An e-way bill is valid for a day for a distance less than 100km. For every 100km, thereafter, the validity is an additional day from the relevant date.
An e-way bill was made mandatory for all inter-state movement of goods from 1 April. It is also mandatory for all movement of goods within a state, subject to state-level value thresholds. So far, more than 130 million e-way bills have been generated. However, transporters say this may further complicate the e-way bill system. “Automating distance in e-way bill will reduce the error in the distance. However, the primary area of concern for a taxpayer or transporter is error in the vehicle number,” said Abhishek Gupta, managing director, Prakash Parcel Services Ltd.
He said it is possible that a transporter uses different routes for his shipments, depending on other logistics, which could lead to an increase in the distance travelled than what is calculated by merely entering PIN codes of the starting point and the end destination.
“Automation may complicate things,” he added.
