E-Way Bill Generation Drops to a 3-Month Low in February: Potential Impact on March GST Collection

E-way bill generation experienced a dip in February, hitting a three-month low of over 8.18 crore, as compared to over 8.24 crore and 8.41 crore in January and December, respectively. While February data is based on 28 days, the numbers for January and December are based on 31 days. The total number of e-way bills generated in December 2021 was 7.16 crore, which declined to 6.88 crores in January 2022 but rose slightly to 6.91 crores in February 2022.

E-way Bill Generation as an Indicator of GST Collection

E-way bill generation serves as an indicator of GST collection in the following month. Therefore, a lower number of e-way bills generated in February may potentially lead to lower GST collection in March. However, some experts argue that e-way bill generation is not directly linked to revenue collection.

Understanding E-way Bills

An e-way bill is an electronic document that provides evidence of the movement of goods. According to Rule 138 of the CGST Rules, 2017, every registered person who causes the movement of goods with a consignment value over ₹50,000 must generate an e-way bill. The consignor or consignee must generate the e-way bill if transportation is done by own/hired conveyance, or by railways, air, or vessel.

Expert Opinions on E-way Bill Generation

According to Prateek Bansal, Tax Partner with White and Brief, Advocates & Solicitors, a decline in e-way bill generation indicates stricter anti-evasion measures adopted by GST mobile squad officials across the country. While a lower generation of e-way bills may suggest a downward trend in GST collection for March 2023, such a reduction may prove beneficial in the long run as unscrupulous activities would be weeded out.

Sanjay Chhabria, Director at Nexdigm, explains that e-way bills determine the movement of goods, but the number of permits raised in a particular period cannot be directly linked to revenue collections. Instances like internal stock distribution or redistribution within a company will need e-way bills, but may not translate into revenue collections.

Festival Push and Expected GST Collection

With the upcoming festivities in March and April, there could be a rise in the consumption of goods, leading to higher manufacturing growth. During a 12-month period from March 2022 to February 2023, GST collection has been ₹1.40-lakh crore or more every month. April 2022 witnessed the all-time high collection of ₹1.68-lakh crore, while the second-highest collection was ₹1.56-lakh crore in January 2023. The government expects over ₹1.50-lakh crore in the coming months.

In conclusion, while a decrease in e-way bill generation may affect GST collection, it is not a direct correlation. Stricter anti-evasion measures and upcoming festivals may impact the movement of goods, leading to fluctuations in GST collection.