Introduction
There are various forms in which black money can be converted. One of the most common and handy options could be converting it into stock. This can further result in massive amounts of tax evasion. Therefore, to cover this loophole, eWay Bills are mandated stock transfer.
EWAY Bills provide the goods in transit with proof of belongingness. However, if you are not sure when an EWAY Bill is required for stock transfer, consider reading this article till the end. It will also discuss the requirements for EWAY bill in transfers. But let’s first start by understanding what stock transfer is.
Understanding Stock Transfer
Stock transfer is a crucial element in the warehouse logistics process that involves the movement of items within a distribution chain. The primary objective of a stock transfer is to enhance storage capacity utilisation, streamlining inventory handling during peak workloads.
Types of Stock Transfers
Some of the ways in which stocks are transferred are:
-
Intra-company Transfer
An intra-company transfer occurs when the exchange of stock happens within two locations belonging to the same company. Despite the simplicity arising from involvement with only one company, meticulous documentation is crucial for maintaining efficiency.
-
Inter-company Transfer
The inter-company stock transfer involves the movement of inventory between two different companies. This type of transfer is more complex, requiring coordination between various departments such as procurement, liaison, and logistics in each participating company. Challenges may arise due to differing identification codes used by each entity.
-
One-step Process
In a one-step process, goods are issued and received simultaneously through a single Stock Transfer Order (STO). It is ideal for intra-company stock transfers, especially when the locations are in close proximity. While the quantity at the locations changes, the total inventory value remains constant.
-
Two-step Process
A two-step inventory transfer involves both the sending and receiving locations initiating Stock Transfer Orders (STOs). The sending warehouse marks the item as in transit and dispatches it. Upon reaching the destination, the receiving warehouse marks the transaction as complete, updating quantities and valuations at both locations. This method aids in inventory management and efficiency tracking.
How Stock Transfer is Done
In order to carry the stock transfer safely and efficiently, follow the steps below:
Step 1: Planning
Identify the need for a stock transfer based on demand, storage optimisation, or other operational considerations. Assess the type of transfer required (intra-company, inter-company, one-step, or two-step process).
Step 2: Stock Transfer Request
Initiate a formal request detailing the items to be transferred, the source, and destination locations.
Step 3: Transfer Execution
Physically move the items from the source inventory to the designated destination location.
Step 4: Reception at Destination
Receive the transferred stock at the destination, ensuring accurate quantities and conditions.
Step 5: Put Away
Properly place the items in the designated locations at the destination, updating inventory records accordingly.
EWAY Bill: Basics and Applicability
An Electronic Way Bill is commonly known as an eWay Bill. It is a digital document required for the movement of goods. This bill is generated on the eWay Bill Portal. Its main objective is to ensure the easy delivery of goods by giving critical information about the consignment.
Specifically, a GST (Goods and Services Tax) registered person is obligated to generate an eWay Bill when transporting goods in a vehicle whose value exceeds ₹50,000 for a single invoice, bill, or delivery challan. The eWay Bill is created on the official portal.
Additionally, eWay Bills can be generated or cancelled through various methods, including SMS, an Android App, and site-to-site integration through APIs. It is imperative to validate the GSTIN (Goods and Services Tax Identification Number) of parties involved using the GST search tool before generating an eWay Bill. Once generated, a unique Eway Bill Number (EBN) is allocated and accessible to the supplier, recipient, and transporter involved in the transportation of goods.
Applicability of eWay Bills
The issuance of an eWay Bill is mandatory in specific situations involving the movement of goods in a vehicle or conveyance with a value exceeding ₹50,000. These situations include:
- In relation to a ‘supply’: This covers the movement of goods for a consideration (payment) in the course of business, whether it is a sale, transfer, or barter/exchange.
- For reasons other than a ‘supply’ (e.g., return): If goods are being moved for purposes other than a sale, such as returns, an eWay Bill is required.
- Because of inward ‘supply’ from an unregistered person: When receiving goods from an unregistered person, an eWay Bill must be generated.
Certain specified goods necessitate the generation of an eWay Bill even if the value of the consignment is less than Rs. 50,000. This includes:
- Inter-State Goods Movement by the Principal to the Employee: It applies to both the Principal and registered Job-worker involved in the transaction.
- Inter-State Transport of Handicraft Goods: Specifically, when conducted by a dealer exempted from GST registration.
EWAY Bill and Stock Transfer
The utilisation of eWay Bills in the context of stock transfers under the Goods and Services Tax regime is contingent upon two crucial factors: the value of the goods being transferred and whether the transfer is intra-state or inter-state.
-
Intra-state Stock Transfer
If the value of the goods surpasses ₹50,000, an eWay Bill would be required. If not, businesses also have the option to voluntarily generate an eWay Bill for transparency or record-keeping purposes.
-
Inter-state Stock Transfer
An eWay Bill is required for inter-state stock transfer, irrespective of the value of the goods.
Remember, the manufacturer (supplier) is responsible for generating the eWay bill for the stock transfer. You also need to specify “Stock Transfer” as the reason for the movement of goods in the eWay bill.
Exceptions and Exemptions Of EWAY Bill for Stock Transfer
The application of eWay Bills in stock transfers comes with exceptions and exemptions guided by specific factors. Understanding these aspects is crucial for businesses engaged in the movement of goods.
Exceptions in Intra-state Stock Transfers
- Non-Motorised Conveyance: Goods transported using non-motorised conveyances like handcarts, cycles, and bullock carts are exempt from the mandatory requirement of an eWay Bill, regardless of the value.
- Exempted Goods: Certain goods, such as Liquefied Petroleum Gas (LPG) for specific customer categories, alcoholic beverages for human consumption, and petroleum products (crude oil, high-speed diesel, natural gas, petrol, and aviation turbine fuel), are exempt from the eWay Bill requirement.
- Movement within Notified Areas: Some states may designate specific areas within their boundaries where eWay Bills are not obligatory for any value of goods being transported.
Exceptions in Inter-state Stock Transfers
- Customs Supervision: Goods under customs supervision or seal, goods moved from one customs port/station to another under customs bond, and empty cargo containers are exempt from the eWay Bill mandate.
- Exemptions (No eWay Bill Required Regardless of Value): Some of the exemptions provided on eWay Bills both intra and inter-state stock transfers are:
- Goods Treated as No Supply: Goods falling under Schedule III of the GST Act, such as samples, goods for personal use, and gifts, are exempt from eWay Bill requirements.
- Weighing within 20 km: Goods moved for weight within a 20 km radius, accompanied by a delivery challan, do not necessitate an eWay Bill, irrespective of their value.
Compliance and Legal Aspects Of EWAY Bill for Stock Transfer
The EWAY Bill has emerged as a vital component, especially concerning the movement of goods, including stock transfers. Thus, understanding the compliance and legal dynamics of EWAY Bills in stock transfers is essential for businesses to ensure effortless operations within the framework of the law.
-
Compliance Requirements
Some of the requirements of EWAY bill compliance in stock transfer are:
-
Generation Responsibility
The responsibility for generating the EWAY Bill for stock transfer lies with the manufacturer or supplier, emphasising their role in ensuring compliance with GST regulations.
-
Reason for Movement
When creating the EWAY Bill, it is crucial to specify “Stock Transfer” as the reason for the movement of goods, providing clarity on the purpose of the transfer.
-
Accompanying Documents
Depending on the nature of the transfer, specific accompanying documents are required. For intra-state transfers, an Intra-state Delivery Challan (DC) must be issued alongside the EWAY Bill, while an Inter-state Tax Invoice (IGST) is necessary for inter-state transfers.
-
Legal Aspects
Some of the legalities of stock transfer regulations and EWAY bill are:
-
Penalties for Non-Compliance
Failure to generate an EWAY Bill or discrepancies in the information provided can result in penalties ranging from ₹100 to ₹5,000. Thus, adhering to the EWAY Bill mandate is also a means to avoid legal repercussions.
-
Record Keeping
Maintaining meticulous documentation, including invoices, delivery challans, and EWAY Bills, is essential for audit purposes. This record-keeping practice ensures transparency and facilitates a smooth audit process when required.
-
GST Returns
Reflecting the details of stock transfers in GST returns is fundamental for accurate tax reporting. The EWAY Bill data forms a critical component of this reporting.
Process of Generating an EWAY Bill for Stock Transfer
The generation of an eWay Bill for stock transfer is a crucial aspect of GST compliance in India. Ensuring an effortless process involves adhering to specific steps and requirements:
-
Login to the EWAY Bill Portal
Access the official EWAY Bill Portal, which is https://www.ewaybillgst.gov.in/
-
Enter Credentials
Log in using your GSTIN (Goods and Services Tax Identification Number).
-
Find ‘Generate New EWAY Bill’
Look for the option to ‘Generate New EWAY Bill’ on the portal’s dashboard.
-
Select Transaction Type
Choose the relevant transaction type, indicating whether it is an intra-state or inter-state stock transfer.
-
Enter Details
Fill in the required details, including the GSTIN of the supplier, recipient, and transporter. Specify the reason for the movement as “Stock Transfer.”
-
Provide Item Details
Enter information about the goods being transferred, including their description, quantity, and value.
-
Verify Details
Review all entered details for accuracy, ensuring that the information aligns with the accompanying documents, such as invoices and delivery challans.
-
Generate EWAY Bill
Once all necessary details are entered and verified, proceed to generate the EWAY Bill. A unique EWAY Bill Number (EBN) will be allocated.
-
Print or Save the EWAY Bill
After successful generation, the EWAY Bill can be printed or saved for future reference.
-
Accompanying Documents
For intra-state stock transfers, issue an Intra-state Delivery Challan (DC) along with the EWAY Bill. In the case of inter-state transfers, an Inter-state Tax Invoice (IGST) is required.
-
Transportation of Goods
Ensure that the goods being transferred are accompanied by the generated EWAY Bill during transportation. The transporter should have a copy as well.
-
Validity Period
Be mindful of the validity period of the EWAY Bill, as it varies based on the distance to be covered. Renew the EWAY Bill if the transportation extends beyond the initial validity period.
Impact on Business Operations Due to EWAY Bill Requirement for Stock Transfer
The introduction of the EWAY Bill requirement for stock transfer within India has had a significant impact on business operations. Here is a breakdown of the key impacts:
-
Enhanced Transparency and Compliance
EWAY Bills provide real-time tracking of goods, making the supply chain more transparent and streamlining the movement of goods. This helps businesses achieve better compliance with tax regulations.
-
Reduced Transit Time
Simplified e-verification processes at check posts often lead to faster clearances, minimising delays and reducing transit times for goods. This translates to quicker deliveries and improved customer satisfaction.
-
Improved Inventory Management
Real-time tracking data generated through EWAY Bills allows businesses to gain better visibility into their stock levels and movements. This can lead to optimised inventory management, reduced buffer stock requirements, and more efficient warehouse operations.
-
Increased Compliance Burden
Integrating EWAY Bill generation into existing workflows can add an initial layer of complexity, requiring additional training and resources for personnel. This can increase workload and administrative costs.
-
Data Accuracy and Connectivity
Errors in data entry or unreliable internet connectivity can lead to delays, penalties, and disruptions in logistics operations. This highlights the importance of accurate data entry and robust technical infrastructure.
-
Potential Cost Increases
While EWAY Bills can decrease overall logistics costs in the long run, the initial compliance burden and technological needs might lead to temporary cost increases for some businesses.
Conclusion
The incorporation of EWAY Bills into the logistics framework of stock transfers under the GST in India is a necessity for businesses. Thus, understanding the compliance, legal aspects, and step-by-step process of EWAY Bill generation is essential for effortless operations and adherence to regulatory mandates. Organisations can ensure GST compliance and streamline their logistics by maintaining meticulous documentation and diligently following the prescribed procedures. This promotes efficiency and minimises legal risks.
Frequently Asked Questions
Q1. Does stock transfer attract GST?
In the pre-GST era, free supplies were solely subject to excise. However, with the implementation of GST, the provision considers the supply of goods between parties without consideration as a deemed “supply.” Consequently, the stock transfer of promotional materials or free samples is now liable to GST.
Q2. What is the disadvantage of the eWay bill?
Extending the bill results in the generation of multiple waybill numbers for a single dispatch or invoice, potentially leading to instances of duplication.
Q3. Can you claim ITC on stock transfer?
Yes, the recipient can claim an Input Tax Credit (ITC). However, there is a condition attached: the recipient must make the payment, including the tax, within 180 days from the invoice date. It is important to note that this condition does not apply when the tax is payable under the reverse charge mechanism.
Q4. Who pays the EWay bill?
As a consignor, consignee, recipient, or transporter, every registered individual must generate an e-way bill for goods transported via their own or hired means of transport (air/rail/road) under GST.
Q5. Is an EWay bill required for less than 50 km?
Conveyance details need not be declared if the distance between the consignor’s and transporter’s locations is below the minimum e-way bill generation distance of 50 kilometres.
Q6. Can you reject the EWAY bill after 24 hours?
The recipient has the option to cancel the e-way bill within 24 to 72 hours from its generation. However, cancellation is not permitted after 72 hours have elapsed from the time of e-way bill generation.
Q7. What is the GST EWAY rule?
Rule 138 of the CGST Rules, 2017 outlines the e-Way Bill mechanism. Notably, it emphasises that information must be provided before the commencement of goods movement, whether it pertains to a supply or for non-supply reasons.
Q8. Do stock traders pay GST?
GST is not applicable to capital gains from share trading. Capital gains are subject to income tax regulations, and GST is not levied on these transactions.
Q9. Can you have 2 trade names in GST?
One notable change is the provision allowing a taxpayer to register multiple trade names under a single GST registration. This modification was introduced to simplify the registration procedure for businesses with various trade names. Previously, businesses had to secure separate GST registrations for each trade name.
Q10. Can you change my trade name in GST?
If there are any changes to the legal name of a business, it’s not necessary to cancel the GST registration certificate. Instead, the existing GST registration can be amended to reflect the new business name. The process involves updating the business name on the GST portal by filing FORM GST REG-14 within 15 days of the change.
