When is an e-way bill required

An e-way bill is an electronic document. It is generated using the EWB portal - www.waybillgst.gov.in. This system was launched on April 1, 2018, and is mandatory for all the inter-state movement of goods. The e-way bill aims to: 

- Prevent tax evasion 

- Decrease transit times 

- Reduce paperwork  

Additionally, it also acts as a digital compliance tool. The e-way bill system requires taxpayers to log in to the GST portal and upload necessary details such as the consignment value, HSN code, vehicle details, and GSTINs involved.

Once created, this document serves as proof of the legitimacy of the goods transported. For this purpose, transporters must carry a copy of the e-way bill (electronic or physical) to present during inspections.

But, is an e-way bill always required? Currently, there is confusion in the market as to when an e-way bill is mandatory. In this article, let’s see some specific cases when an e-way bill is mandatory and who must generate it. Also, we will check out some exemptions to the e-way bill system.

Cases when an e-way bill is mandatory

The generation of an e-way (in the prescribed format ‘EWB-01’) is necessary in the following cases: 

1. Value of goods more than Rs. 50,000 

As per Section 60 of the GST Act, an e-way bill is necessary when the total value of transported goods is more than Rs. 50,000. Please note that this threshold applies to the value of goods without including the GST charges.

For transactions below Rs. 50,000, generating an e-way bill is optional. However, the following exceptions apply to this rule:

2. E-way generation by the recipient of goods

When a supplier is unregistered under GST but the recipient is GST-registered, the recipient must generate the e-way bill. This ensures tax compliance, even when one party is outside the GST network.

For example,  

• Say a small vendor supplies goods to a large seller active on online marketplaces. 

• Here the recipient takes responsibility for e-way bill generation.  

It must be noted that this rule maintains accountability in such transactions and prevents revenue loss.  

3. Transporter’s responsibility to generate an e-way bill 

If the supplier does not generate an e-way bill, the responsibility shifts to the transporter. This rule applies irrespective of whether goods are moved by road, air, or water.

For example, 

• Say a logistics company is transporting goods for a client. 

• Now, this company must ensure that an e-way bill exists for compliance. 

• Failure to do so results in penalties during transit checks 

This rule encourages transporters to coordinate with suppliers and recipients and generate an accurate e-way bill. It also discourages malpractice in goods transportation. 

Exemptions to the e-way bill system 

To reduce the compliance burden, the government has exempted the generation of e-way bills in the following cases: 

• Goods valued below Rs. 50,000 are exempt from the e-way bill requirement. 

• Goods transported using non-motorised vehicles (e.g., carts or bicycles) do not require an e-way bill. 

• Goods transported under customs seal or direct supervision are exempt from e-way bill generation. 

• Cargo being transported to Bhutan or Nepal does not need an e-way bill. 

• Goods moving to a Container Freight Station (CFS) or Inland Container Depot (ICD) from customs stations or ports are exempt. 

• Transport of empty cargo containers is not subject to e-way bill rules. 

• Goods listed as exempt under GST or specified in state/ Union Territory notifications do not require an e-way bill. 

Conclusion

As per the current GST rules, an e-way bill must be generated when the value of transported goods is more than Rs. 50,000. The responsibility to generate an e-way bill lies with the recipient or transporter in specific cases.

This system has reduced paperwork by eliminating the need to obtain multiple state-wise permits. In most cases, an e-way bill in the prescribed EWB-01 format would suffice and be valid across all states.

Also, it allows for real-time tracking of goods through the use of RFID-based tags. Such monitoring ensures strict compliance and benefits all the associated stakeholders, like government authorities, banks, NBFCs, and recipients.

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