In 2022, the Indian logistics market measured approximately $274 billion USD. Projections indicated that by 2030, this market would expand to $563 billion USD, exhibiting a compound annual growth rate of 9.4%. The sector has witnessed substantial growth, attributed to the automobile industry’s rapid expansion, taxation policy shifts, and the flourishing e-commerce sector, heavily reliant on logistics for nationwide service.
The introduction of the e-waybill system under the GST framework aimed to standardize logistics and supply chain processes. This system has significantly benefited stakeholders in the transport and tax ecosystem and supply chain management by addressing issues related to tax evasion, ensuring clarity, and streamlining operations.
Learn more about how the e-waybill has impacted logistics and supply chain operations.
E-waybill’s Role in Optimizing Logistics and Supply Chain Operations
Comprising the road transport sector (including unorganized and small enterprises, trucking companies, and other fleets), storage and warehousing, and third-party logistics, the logistics industry in India has faced challenges despite its vast scope.
These historically included challenges such as declining operational efficiency due to complex networks, rising coordination costs across supply chains, inadequate infrastructure, and entry fees imposed by different states. The plethora of business taxes further complicated and increased the cost of logistics management.
Moreover, before the GST framework, it was more common than now for businesses to establish hubs and transit points in multiple states to circumvent state value-added tax (VAT). This resulted in accounting complexities, lack of clarity, and opportunities for tax evasion. This is where the e-waybill’s standardized framework stepped in to offer solutions to such situations.
Simultaneously, the e-waybill system aims to enhance supply chain management efficiency (SCM). SCM encompasses the comprehensive oversight of the movement and storage of raw materials, work-in-process inventory, and finished goods from origin to ultimate consumption.
Using an integrated system approach, SCM effectively manages the flow of information, materials, and services throughout the entire supply chain. Given its important role in the contemporary business environment, SCM empowers organizations to optimize decision-making processes related to sourcing, production, transportation, warehousing, and distribution.
The introduction of the e-waybill system strategically aligns with this objective, serving as a tool to boost efficiency and effectiveness in addressing the diverse components of supply chain management.
Also Read: e-Way Bill Registration Process: A Complete Guide
Let’s take a close look at the impact of the e-waybill on logistics and SCM.
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Streamlining Documentation for Logistics Efficiency
The E-way bill system has streamlined documentation processes, offering a unified document for consignments moving through multiple states. In the pre-GST era, logistics operators grappled with the burden of preparing and managing diverse documents for each state crossed during the transit of goods.
The E-way bill’s simplification of paperwork has directly contributed to operational efficiency and time savings, allowing logistics companies to focus more on the seamless movement of goods.
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Enhanced Speed and Efficiency in Goods Movement
A notable impact of the E-way bill system is the acceleration of goods movement. The removal of numerous state border and national check posts, which historically caused delays and increased transit times, has facilitated faster and smoother transportation.
The system now detains vehicles only in cases where tax evasion is suspected, minimizing disruptions and optimizing the overall speed of goods delivery.
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Cost Optimization in Transportation
Adopting the E-way bill system has brought about cost savings in transportation operations. The improved efficiency in goods movement has reduced fuel consumption and overall transportation-related expenses.
This cost-effectiveness is a crucial factor contributing to enhanced profitability for logistics companies, allowing for more competitive pricing in the market.
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Warehouse Consolidation for Strategic Logistics
With the seamless flow of goods enabled by GST and the E-way bill, logistics operators have been able to reconsider their warehouse strategies.
Previously, companies maintained warehouses across various states to navigate tax implications. Now, consolidating warehouses into larger, strategically located facilities has become a viable option. This shift not only reduces warehousing costs but also enhances supply chain responsiveness.
Real-time Tracking and Visibility of Goods Movement
As explained above, the e-waybill system has greatly benefitted the logistics and SCM sectors. However, it has also benefited the tax sphere by offering real-time tracking and monitoring of goods.
The system has nurtured efficiency and transparency in the movement of consignments across the nation. This digital framework significantly enhances visibility, enabling seamless oversight of the entire supply chain process.
At the center of this development is the integration of RFID/FasTag with the E-way bill system, effective from January 1, 2021. Radio Frequency Identification Device (RFID) utilizes radio waves for object detection and identification.
Transporters are mandated to acquire an RFID Tag, typically embedded on the vehicle’s windscreen. The e-way bill details for the transported goods are input into this RFID Tag device. As the vehicle traverses the highway’s RFID Tag reader, the device transmits the stored details to the Government Portal.
This data serves future validation purposes for Revenue Authorities, although manual verification may still be necessary for cases involving the transport of sensitive goods or suspicion of fraudulent activities.
This integration empowers revenue authorities to validate supplies made by GST registered entities and identify discrepancies, such as dummy E-way bills associated with no actual movement of goods, effectively curbing bill trading and circular trading.
The MIS System, along with the Officer’s mobile App, leverages the RFID information to generate insightful reports. These reports offer a comprehensive view of vehicles passing through specific tolls, enabling the identification of commercial vehicles without E-way bills in real-time, thereby curbing illicit practices.
Furthermore, the system allows authorities to monitor vehicles transporting critical commodities within a state, providing crucial information. The integration also facilitates the identification of suspicious vehicles and those associated with watch-listed GSTINs, aiding authorities in timely intervention.
Moreover, the system offers detailed insights into the recent toll history of specific vehicles, helping identify deviations from expected routes and ensuring compliance. While the E-way bill system’s integration with RFID certainly enables tracking, it additionally serves as a valuable tool for authorities to conduct risk-based analysis, trend analysis, and supply chain monitoring.
Improved Coordination and Collaboration Among Supply Chain Stakeholders
The multifaceted benefits of the e-waybill system also include improved coordination and collaboration among supply chain stakeholders. The system’s integration with various platforms, including RFID/FasTag and the overall GST system, creates a unified and transparent digital environment. Real-time data sharing and accessibility empower stakeholders to track and monitor the movement of goods seamlessly, as mentioned above. This environment, as an effect, supports trust-building and prevents tax evasion.
Moreover, the streamlined process of generating e-waybills, coupled with its integration into the GST framework, promotes efficiency and accuracy in tax compliance. This standardized digital process ensures that all supply chain participants. It helps consignors, consignees, and transporters adhere to a common and easily accessible documentation protocol. Such a standardized approach minimizes errors and promotes a synchronized flow of information throughout the supply chain.
Reduced Delays and Bottlenecks in Goods Transportation
The e-waybill system has so far had a positive effect on minimizing delays and bottlenecks in goods transportation.
Firstly, it is because of the digital nature of the compliance processes associated with goods transportation. With e-waybills, there is no need for physical documentation, such as paper waybills, invoices, and related records. This eliminates the time and effort associated with printing, handling, and storing paper documents. There is also no need to visit physical offices for submitting or verifying documents, alleviating delays on the transporter/taxpayer end as well as the authorities’ end.
Additionally, e-waybill has significantly decreased the need for physical inspections. This has resulted in notable time and resource savings for both authorities and transporters. The process eliminates the requirement for businesses to carry a physical copy of the bill, as generation occurs before goods transportation, with verification executed through technological means.
The introduction of Real-time and Analysis Reports on RFID for officers has, of course, marked a crucial advancement. This initiative included the creation of real-time reports on vehicles without e-waybills at specific toll plazas, aiding officers in intercepting non-compliant vehicles while allowing others to move freely. This measure improves the system’s effectiveness in preventing tax evasion and fraud, and preventing unnecessary delays for compliant vehicles.
Transporters typically encounter only one inspection stop during their journeys, reducing concerns about additional inspections when crossing multiple states. The strategy involves minimizing random checks and streamlining stops that require a direct match of goods with e-waybill details. Combining these operations with regular assessments at senior levels opens avenues for continuous improvement. It maintains an efficient framework beneficial for all stakeholders.
Endnotes
In essence, the e-way bill system in logistics significantly streamlines documentation, reducing the burden on transporters. This streamlined process leads to faster movement of goods, contributing to enhanced efficiency in supply chain management. Additionally, the elimination of multiple state checkpoints and the consolidation of warehouses under the e-way bill system contribute to substantial cost savings for the logistics and supply chain industry.
Lastly, the contents of this article should not be interpreted as a legal opinion or representation of the author’s views. The information provided is intended solely for informational and educational purposes. Although care has been taken in preparing this article, there may be inadvertent mistakes and omissions. The author disclaims any liability for losses or damages of any nature resulting from inaccurate or incomplete information in this document or any actions taken based on it.
Also Read: SaaS startup CaptainBiz launches unlimited e-invoices and e-way Bills on its app for MSMEs
FAQs
Here are some frequently asked questions.
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Where can we generate an e-waybill?
The e-waybill can be generated on the common portal at https://ewaybillgst.gov.in.
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Why is the e-waybill needed?
The e-waybill is mandatory as per Section 68 of the GST Act, which stipulates that the person in charge of a conveyance transporting goods above a specified value must carry prescribed documents and devices. Rule 138 of CGST Rules specifically designates the e-waybill as the obligatory document for certain consignments, making its generation a legal requirement under the GST framework.
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How can RFID Tagging be obtained?
RFID tags are affixed to vehicle windshields by transporters. Distribution centers designated for each jurisdiction across India facilitate RFID installation.
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What are the consequences of not obtaining RFID Tagging?
Failure to obtain RFID tagging may result in penalties. According to CGST Rules, goods must be accompanied by an E-way Bill, which can be generated on the GST Portal. If the e-way bill is not mapped to an RFID, penalties for non-generation of the e-way bill will apply, as specified in notifications from the GST Commissioner.
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How is RFID Tagging reflected in the EWB?
RFID tagging is associated with the vehicle, not the e-way bill. While inspectors can still check the e-way bill, the RFID tagging of the vehicle does not exempt it from scrutiny for potential tax evasion.
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Who can initiate the e-way bill?
The consignor, consignee, registered person, or transporter of the goods can generate the e-way bill. Unregistered transporters can enroll on the common portal to create e-way bills for their clients. Additionally, any citizen can generate an e-way bill for the movement of goods for personal use.
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Is there a validity period for e-way bills?
Yes, the validity of e-way bills depends on the transportation distance. Regular vehicles have one day of validity for every 200 kilometers, while Over Dimensional Cargo vehicles have one day of validity for every 20 kilometers. The validity expires at midnight on the last day, with an option to extend it 8 hours before and after expiry.
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Are e-way bills required for all goods?
Yes, with specific exemptions outlined in certain rules. Even for the movement of handicraft goods or those for job-work under specific conditions, an e-way bill is mandatory, regardless of the consignment value.
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For which transactions are e-way bills mandatory?
E-way bills are mandatory for all transactions, whether inward or outward, within a state or interstate, involving unregistered persons, or for non-supply reasons. Refer to specific notifications/rules for detailed information.
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Is an e-way bill needed for goods transported within a 10-kilometer radius?
No, goods transported within a state are exempt from requiring an e-way bill if the distance is within 50 kilometers, an extension from the previous 10 kilometers.
