The government's weekend decision to enforce February 1 as the deadline for the e-way bill — a new complex digital document and tracker for cargo transportation by road — has left the logistics and transportation industry in the lurch.
The bill will be introduced on a trial basis in the middle of January, which means companies will get less than two weeks to adapt to it before its implementation in the beginning of Feb. It is part of the compliance procedure to the goods and services tax.
The decision was taken last Saturday at a meeting of the GST Council. The February 1 deadline is for interstate transportation of goods, and the deadline for implementing the bill on intra-state transportation is June 1.
"The time given to adapt to it is definitely less. There are several aspects that are not clear and several issues that need to be resolved," said Naresh Sharma, managing director at Avvashya CCI Logistics, part of the group that also holds Allcargo LogisticsBSE 2.40 %.
"Majority of these activities are carried out by some data entry operators sitting in the warehouse and expecting him/her to train on new systems and be error-free in only 15 days will be amajor challenge," said Bipin Kulkarni, vice president, sales and marketing at Spear Logistics a unit of FM Logistic, a Euro1- billion French company.
"There's still quite a bit of uncertainty on the e-way bill. We have been seeking clarity, but we still don't know what it will look like. As per indications, we will have some clarity only by mid-January which means the industry has just 15 days to be ready for it. It would have been good if the application developer had done stakeholder consultations with industries like express industry, since our processes and needs are different from full truck operators," said Vijay Kumar, chief operating officer of the lobbying body Express India Council of India.
The government introduced GST on July 1. The result of the biggest tax overhaul in the country since independence, GST replaces at least seven indirect tax heads including countervailing duty, special additional duty of customs, excise duty, service tax, central sales tax, value-added tax, octroi and state cesses with a single tax on goods and services.
GST will likely have far-reaching consequences on the logistics and supply chain sector, transforming warehousing systems and cargo transportation in the country.
The e-way bill, envisaged as an effective mechanism to track cargo and ensure tax compliance, has however been one of the contentious issues, especially as companies say it will complicate processes rather than simplifying them.
An e-way bill is generated every time a cargo item worth more than Rs 50,000 crosses 10 kilometers. Any entity under GST, the shipper/consigner, the logistics firm or the transporter can generate the bill. Unlike earlier, when only an invoice was generated on cargo transportation, the bill marries the cargo and its vehicle. This means each vehicle number has to be registered with the GST network and a new bill is generated every time the vehicle is changed.
All this, given India's road conditions and the unorganised nature of the country's transportation industry, will make compliance complex, say industry watchers. For instance, generating a fresh bill online may be impossible if a vehicle breaks down in the middle of a highway, far from internet connectivity.
"There is a time-bound validity of the bill, which is much shorter than the earlier bill. What if a vehicle breaks down in the middle and has to be repaired? A new bill cannot be generated and the current one may lose its validity," said Sharma of Avvashya-CCI. "Also the consigner generates the bill and the transporter validates it. What if one of them isn't there at the time of transportation?" he wondered.
"If some expensive items are ordered by the dealer for one customer, it will be shipped by a truck from the factory to the dealer, and then further by the dealer to the customer. That will need 2 e-way bills. If the customer cancels the order before it reaches him, another e-way bill will have to be generated," said Kulkarni of Spear.
Some of them are hopeful even though they admit they are currently completely in the dark.
"As of today, there isn't sufficient clarity on the e-way bill and its implementation. Our only option is to wait for more details on the same. But we hope the bill will be simplified enough for it to be easily implemented by its target date of February 1," said Anshuman Singh, chairman of the Warburg Pincus-backed Stellar Value Chain solutions.
Prashant Deshpande, partner, Deloitte India, said the government has given several clarifications on the bill which would bring forth considerable clarity if they are incorporated into the final bill during its implementation.
"Road transport traditionally being a technically challenged sector in India, adoption to new processes is a challenge for companies. Generally, whenever there's a change in processes, companies need time to adapt. Even in case of extensions, companies face challenges: GST is a case in point. The government has in recent months been aggressive in implementing new processes and it's in the best interest of the sector to strive to achieve these targets," said Prahlad Tanwar, executive director at KPMG