The Manufacturing market is anticipated to have around USD6.58 million enterprises by 2023, with an expected CAGR of 12.92% from 2023 to 2028. This market is also one of the top gainers due to the implementation of Goods and Services Tax (GST).
In the period before the implementation of GST, consigned goods required either an invoice, delivery challan, or the designated challan as per the applicable VAT or Sales Tax Act of the respective State. Typically, these goods were subject to verification at both outgoing and incoming check posts within the region, leading to significant delays in their movement. The check posts or roving squad detentions often resulted in prolonged wait times, particularly due to inadequate documentation or other reasons.
The introduction of the GST aimed to smoothen the movement of goods and enhance business operations. Consequently, check posts were eliminated nationwide in the GST regime. However, many suppliers employed job workers to transport their goods and to maintain oversight on the documentation of goods movement; the government implemented an e-way bill on the e-portal.
Read this article to know what this e-way bill is, who needs to generate it in different scenarios, and what documents you must have.
What is Job Work Under GST?
Under the CGST Act 2017, job work is defined in Section 2(68) as “any treatment or process undertaken by a person on goods belonging to another registered person.” In the context of the GST, the individual carrying out the job work is referred to as the ‘job worker.’ However, despite the treatment or process, the ownership of the goods remains with the principal, not transferring to the job worker.
Job work, as per GST, involves processing or working on raw materials or semi-finished goods provided by the principal manufacturer to the job worker. The purpose is to complete a part or the complete manufacturing process, resulting in the production or finishing of an article or another essential operation. A common example is when large shoe manufacturers (principals) send partially made shoes (upper part) to smaller manufacturers (job workers) to add the soles.
Additionally, according to the GST Act, the value of goods sent by the principal to the job worker is not included in the aggregate turnover of the registered job worker. This ensures that the value of goods processed or treated by the job worker does not contribute to their overall turnover calculation.
What is an E-Way Bill?
It is an electronic document required for the movement of goods. According to the GST regulations, a GST-registered person cannot transport goods in a vehicle if the value exceeds ₹50,000 (for a single invoice or delivery challan) without an E-Way Bill.
The E-Way Bill can be generated with the help of the official E-Way Bill Portal. Alternatively, it can also be generated or cancelled through SMS, an Android App, and site-to-site API integration by entering the correct Goods and Services Tax Identification Number (GSTIN) of the parties involved. It is crucial to validate the GSTIN with the help of the GST search tool before using it for E-Way Bill generation.
When an E-Way Bill is made, a unique E-Way Bill Number (EBN) is generated. This number is accessible to the supplier, recipient, and transporter.
What are the Components of an E-Way Bill?
An E-Way bill comprises two main parts: Part A and Part B. The information in Part A is used to request details about the goods and the transportation, while Part B contains details about the transporter.
Part A Includes the Following Details:
- GSTIN of the recipient.
- Place of delivery, specified by the PIN Code.
- Invoice or Challan number and the date of issue.
- Value of the goods being transported.
- HSN (Harmonised System of Nomenclature) code of the goods.
- Transport document number, which can be the Goods Receipt Number in the case of road transport.
- Reasons for transportation.
Part B Includes the Details of the Transporter, such as:
- Vehicle number
- Transporter ID
What are the Prerequisites to Generate the E-Way Bill?
The prerequisites to generate an E-Way bill are as follows:
1. Registration on the GST Portal
The person generating the E-Way bill must be a registered individual on the GST portal.
2. Enrollment on E-Way Bill Portal
The person, including the transporter, must register on the E-Way bill portal if they are not registered under GST.
3. Documents Required
The individual generating the E-Way bill should have relevant documents, such as:
- Tax invoice
- Bill of sale
- Delivery challan
4. Transporter’s Details
The person generating the E-Way bill must have details of the transporter, including the Transporter’s ID, the vehicle number in which the goods are being transported or the transporter document number.
What is the Duration for Which an E-Way Bill is Valid?
The validity of the E-Way bill depends on the distance that the goods are to be transported. Here are the details:
1. Regular Vehicle or Transportation Modes
One-day validity is provided for every 100 kilometres or part of its movement.
2. Over Dimensional Cargo (ODC) Vehicles
In the case of over-dimensional cargo vehicles, one-day validity is provided for every 20 kilometres or part of its movement.
3. Validity Expiry
The bill expires at midnight on the last day of its validity.
What are the Benefits of the E-Way Bill?
Implementing the E-Way Bill system has brought about several benefits, streamlining the movement of goods and enhancing transportation efficiency. The following are some prominent advantages:
1. Reduction in Documentation
The system minimises the requirement for extensive state-wise documentation, simplifying the goods movement process. Introducing RFID devices (Radio Frequency Identification Devices) in vehicles further reduces the need for physical copies of E-Way Bills.
2. Cost Reduction and Proper Invoicing
Electronic way bills contribute to cost reduction by promoting accurate invoicing and reducing tax evasion. This, in turn, is expected to lower the proportion of logistics cost to GDP, aligning it more favourably with international standards.
3. Fast and Efficient Transportation System
The E-Way Bill system has eliminated numerous checkposts across state borders and national highways. This has significantly reduced the gap between the average distance travelled by Indian trucks and that in developed countries.
4. Simplified E-Way Bill Generation
The government’s online portal and the E-Way Bill system are designed to be simple and user-friendly. Dealers can easily self-generate E-Way Bills, and ongoing efforts aim to simplify the process further, making it easily accessible even to those with limited technical expertise.
Job Work and E-Way Bill Requirements
Job work involves the transportation of goods between the principal (the entity outsourcing the task) and the job worker (the entity completing the assigned task).
In certain scenarios related to job work, the generation of the GST E-Way bill becomes essential, particularly when the consignments cross state borders. Understand these scenarios to know who is responsible for generating the E-Way bill in each case:
1. Goods Sent to a Job Worker by the Principal
When the principal sends goods to a job worker in a different state, the principal is obligated to generate the E-Way bill, even if the value of the goods is below Rs 50,000.
2. Inputs Obtained by the Principal After the Finish of Job Work
After the job worker completes the task, the principal may request the goods to be returned to their premises or directly sent to end customers. If the job worker is enrolled on the E-Way bill portal, they generate the E-Way bill. Otherwise, the outsourcer needs to generate the E-Way bill.
3. Finished Goods Supplied Directly to the Customer From the Job Worker
If the job worker is enrolled under section 25 of the GST Act and the outsourcer mentions their place of business as their other place of business, the job worker generates the E-Way bill when supplying finished goods to end customers. If the job worker is not enrolled on the E-Way bill portal, the outsourcer generates the E-Way bill.
4. Supplier Sending Goods to the Job Worker
When the supplier of the principal sends goods to the job worker, the supplier needs to generate the E-Way bill for the job work.
What are the Documents Required Before Sending Goos For Job Work?
When sending goods for job work, several essential documents need to be provided to ensure a smooth and compliant transaction. Here is a list of the documents required:
1. Date and Delivery Number of the Challan
The date and a unique delivery number associated with the Challan help track and identify the transaction.
2. GSTIN, Address, and Name of Consignor and Consignee
GSTIN and the complete address and name details of both the consignor (sender) and consignee (recipient) are crucial for tax compliance.
3. HSN Code
The HSN code specifies the classification of the goods sent for job work, facilitating uniformity in international trade and tax purposes.
4. Quantity of Supplied Goods
The precise quantity of goods being sent for job work ensures accurate processing and tracking of the materials.
5. Taxable Value of Goods
The value on which GST is calculated is crucial for determining the tax liability. It includes the cost of goods, packing charges, and any other incidental expenses.
6. Applicable GST Rate and Payable GST Amount
Clearly stating the applicable GST rate and the calculated GST amount ensures transparency and adherence to tax regulations.
7. Place of Supply
Indicating the location where the goods are supplied is essential for determining the correct tax jurisdiction and compliance with GST regulations.
8. Signature of the Issuer
The document should be signed by the authorised person, confirming the accuracy and authenticity of the information provided.
What are the Documents Required While Transporting Goods for job Work?
Transporting goods for job work involves carrying specific documents to ensure compliance. Here are the important documents required during the transportation of goods for job work:
- Job Work E-Way Bill Copy
- Delivery Challan
- Invoice Copy (if sent by the vendor of the principal)
In the pre-GST period, the cumbersome paperwork associated with consignments posed significant challenges for suppliers, job workers, and recipients alike. The transition to the E-Way Bill system marked a major shift, unifying everybody on a single platform. With this implementation, a singular document accompanied every consignment, reducing compliance efforts across the entire nation.
However, the generation of E-Way Bills and adherence to essential documentation for sending and transporting goods are critical steps. You must prioritise this understanding to ensure a smooth and penalty-free experience in your operations under the GST regime.
Frequently Asked Questions
Q1. What is the use of an E-Way Bill?
The use of an E-Way bill is to track goods in transit.
Q2. Is E-Way Bill Compulsory?
Yes, creating an E-Way bill is compulsory for goods with a value exceeding ₹50,000 during transportation. However, it becomes optional when the value of transported goods is below ₹50,000.
Q3. What are the Parts of the E-Way Bill?
The E-Way Bill consists of two sections: Part A and Part B. Part A includes details about the products, and Part B contains the vehicle’s identification number.
Q4. What is the Duration for Which the E-Way Bill is Valid?
The validity of the bill depends on the distance over which the goods are to be transported.
Q5. What is the Penalty for E-Way Bill?
Transporting goods without a valid invoice and E-Way bill is considered an offence. It can lead to a penalty of ₹10,000 or the evaded tax amount (whichever is higher).
Q6. What is the Disadvantage of E-Way Bill?
The E-Way bill system operates entirely on the Internet. Therefore, creating the E-Way bill can pose challenges in regions with limited internet access.
Q7. Can we Generate an E-Way Bill Without the Vehicle Number?
No, a valid vehicle number is a prerequisite for the E-Way Bill to be considered effective for the transportation of goods.
Q8. What is the Difference Between E-Invoice and E-Way Bill?
An E-Invoice records transaction and tax particulars, whereas an E-Way Bill becomes mandatory when the value surpasses ₹50,000.
Q9. What is the Maximum Distance Limit for an E-Way Bill?
The E-Way bill allows a maximum distance entry of 4,000 km.
Q10. How Many Times can you Extend Your E-Way Bill?
Extending the validity is permissible only within 8 hours before or after the expiration of the specified date.