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GST E-way bills: Another compliance burden on the way…

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GST

Mumbai, April 15: Has CBEC added another burden on the compliance of GST by proposing “e-way bills” in the movement of goods worth more than Rs 50,000?

Let’s find the answer below.

The CBEC on Thursday detailed the proposal which made it mandatory for the movement of all goods above Rs 50,000 within the state or across states to incur online registration of the consignment prior the movement and secure an ‘e-way bill’ so that tax officials can inspect them anytime during the transit and check tax evasion.

However the industry experts say that the multi-layered process would make transport of goods a cumbersome, delayed and costly affair.

The draft rules that were outlined on Thursday also say that the transit bills will also be required for transport of goods that are outside of the GST ambit including petrol or diesel and agricultural products.

The practical problem of implementing the e way bill is the fact that it would require participation of three parties– the supplier, the transporter and the recipient. All of them would be required to submit their acceptance or rejection of the consignment by the e-way bill within a short span.

The TOI quotes Prashant Deshpande, indirect tax partner at Deloitte-India who says, “The introduction of e-way bills defeats the design of GST, which is a self-policing mechanism. If at all, e-way bills could have been introduced only for specific goods where past experience reflected tax evasion.”

To simplify the process let’s understand how the e way bill be generated? The consignee or supplier would upload details of consignment over Rs 50,000 onto the GSTN portal. If goods are transported by a transport company, the information uploaded by the sender will be updated by the transport company to create a final e-way bill. Now the final bill will be carried along the goods.

After the e-way bill is generated on the GSTN portal, a unique EBN or e-way bill number will be provided to the supplier, the transporter and the recipient of goods.

The industry experts have cited many issues with the compliance of E-way bills:

  1. Issues of lorry transporters
    “At times, a lorry may not have a pan-India permit, or there could be unforeseen circumstances such as an accident. Thus, in the course of transit, goods would be transferred from one vehicle to another. In such circumstances, the transporter has to create a new e-way bill on the GSTN portal, before further transit. A lot rides on the transporter’s ability to be able to keep up with the new rules. It also puts an additional load on the GSTN portal,”
    says Sunil Gabhawalla, chartered accountant and GST specialist.
  2. Multiple consignments
    Sometimes multiple consignments are transported in one vehicle and in such cases a consolidated e way bill would be required to be generated. The transporter would be required to mention serial number of each e-way bills in respect of each such consignment on the GSTN portal.

An industry expert says to TOI, “A consolidated e-way bill in the required form is to be generated by the transporter prior to the movement of goods — this will make tracking cumbersome for all parties involved.”

  1. The validity

Next practical issue pertains to the period of the e-way bill. It is indeed the great cause of concern as it is not only strict but impractical says industry. As per the notification, for distance less than 100 kms, the validity period is mere one day. While maximum validity is 15 days for the distance more than 1,000 kms.

“The timeline is very strict and impractical — exigencies can arise in the course of transport entailing delays in transit beyond the specified number of days. The draft rules permit physical verification of the goods in transit. Thus, a stale e-way bill could result in detention of the vehicle,
” adds the Transporter.

  1. The issues for buyer

After the consignment is reached the destination, the recipient would be required to communicate its acceptance or rejection covered by the e-way bill, and that too within 72 hours, else it assumed that the recipient has accepted the details.

“There was no need for this additional layer of verification of e-way bills by the buyer as the GSTN system, which operates on a matching concept, already captures such a requirement. The supplier is to provide outward supply details in GST Returns -1, by the 10th of each subsequent month. Details are auto-populated on the GSTN portal and made available to the recipient in GST return 2A for verification within a stipulated time. Changes, if any, on verification, are again to be accepted by the supplier,” explains another transporter.

Last but not the least, a buyer will be required to keep checking the GSTN portal. Plus, if there is a rejection an erroneous e-way bill will result in legal and tax consequences for the buyer.

Public comments on the drafts are invited until April 21. The GST council has announced that it will finalise the draft rules in their May meet.

Wefornews Bureau

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Jio to invest Rs 10,000 crore in 3 years in UP: Mukesh Ambani

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mukesh-ambani

Lucknow, Feb 21: Reliance Jio will invest another Rs 10,000 crore in Uttar Pradesh over the next three years, Reliance Industries Limited Chairman Mukesh Ambani said here on Wednesday.

“Today I am happy to inform this audience that Jio is one of the largest investors in Uttar Pradesh with investments of over Rs 20,000 crore. Jio is providing the highest quality data at the lowest price in the world to over 2 crore citizens of Uttar Pradesh,” Ambani said while addressing the Uc.

“I have come to Lucknow to assure the Prime Minister and the Chief Minister that Jio’s Digital Revolution is here to make the maximum contribution to UP’s development revolution,” he added.

While talking about affordable handsets, JioPhone, Ambani said: “Jio will make available over two crore JioPhones in UP within the next two months on a priority basis.”

He mentioned that Jio has already created over 40,000 direct and indirect jobs in the state.

“Jio will establish a Centre for the Fourth Industrial Revolution within the campus of a reputed university in Uttar Pradesh,” Ambani added.

IANS

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Moody’s places PNB’s ratings under review for downgrade

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New Delhi, Feb 20: Moody’s Investors Service on Tuesday placed under review for downgrade Punjab National Bank’s (PNB) local and foreign currency deposit rating of Baa3/P-3 and foreign currency issuer rating Baa3, an official statement said here.

It said “likely financial impact of the fraudulent transactions is the key driver for the review for downgrade.”

At the same time, Moody’s has placed the bank’s Baseline Credit Assessment (BCA) and adjusted BCA of ba3 and the Counterparty Risk Assessment (CRA) of Baa3(cr)/P-3(cr) under review for downgrade.

PNB, the second largest public sector bank in India, has detected a $1.8 billion fraud in one of its branches in Mumbai, which is being investigated by the Central Bureau of Investigation and the Enforcement Directorate. The amount of fraudulent transactions is equivalent to eight times the bank’s net income of about Rs 1,320 crore ($206 million).

“The primary driver for today’s rating action is the risk of weakening of the bank’s standalone credit profile, as a result of the discovery of a number of fraudulent transactions. On February 14, 2018, PNB announced to the Indian stock exchanges that the bank had discovered some fraudulent and unauthorized transactions amounting to Rs 113.9 billion ($1.8 billion),” Moody’s said.

The credit rating agency said the fraudulent transactions represent a contingent liability and the financial impact would be determined by the relevant law in India.

“Nevertheless, Moody’s expects that PNB will need to provide for at least a substantial portion of the exposure. As a result, the bank’s profitability will likely come under pressure, although the actual impact will depend on the timing and quantum of provisions that need to be made, as well as any prospects for recovery,” the statement said.

“The fraudulent transactions represent about 230 basis points of the bank’s risk-weighted assets as of 31 December 2017. As such, PNB’s capital position would deteriorate markedly, and fall below minimum regulatory requirements, if the bank is required to provide for the entire exposure. Consequently, PNB may need to raise capital externally – mainly from the government – to comply with the minimum Basel III capital requirement of an 8 per cent common equity tier 1 (CET1) ratio by March 31, 2019,” Moody’s said.

Moody’s said the review for downgrade will focus on: the timing and quantum of the financial impact of the fraudulent transactions; any management actions taken to improve the capitalisation profile of the bank, and any punitive actions taken by the regulator on the bank.

“Moody’s assumes a very high probability of government support for PNB in times of need, resulting in a three-notch uplift to its deposit and issuer ratings from its BCA. In the review for downgrade, Moody’s will also assess government support for the bank’s deposits and senior unsecured debt.”

Given the review for downgrade, Moody’s said it is unlikely to upgrade PNB’s ratings over the next 12-18 months.

“Nevertheless, Moody’s could affirm the ratings, if the financial impact of the fraudulent transactions is much smaller than what Moody’s anticipates in this rating action, and/or if the bank manages to strengthen its capital position to a level above the minimum regulatory requirements — including the capital conservation buffer — under Basel III standards, and/or the bank returns to profitability on a sustainable basis,” the statement added.

IANS

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Key Indian equity indices open flat

The barometer 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 33,913.94 points, traded at 33,843.41 points (9.25 a.m.) — up 68.75 points or 0.20 per cent — from its previous session’s close.

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Mumbai, Feb 20: Key Indian equity indices traded on a flat note on Tuesday with marginal upward movement in both the indices.

The wider Nifty50 of the National Stock Exchange (NSE) traded at 10,392.90 points, up 14.50 points or 0.14 per cent from the previous close.

The barometer 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 33,913.94 points, traded at 33,843.41 points (9.25 a.m.) — up 68.75 points or 0.20 per cent — from its previous session’s close.

The Sensex has so far touched a high of 33,931.90 points and a low of 33,753.50 points during the intra-day trade.

The BSE market breadth was bearish with 603 declines and 466 advances.

IANS

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