Data from GSTN, the IT pillar of the indirect tax system, showed that electronic mode bill generation hit an all-time high of Rs 934 crore in August. The previous high was Rs 9.09 million in March this year.
Although GSTN did not mention the reason for the record production, companies appear to be scheduling higher production to meet the festive demand. Additionally, the increase in the number of registered taxpayers and improved compliance have also led to a generational increase. At the same time, the recovery in consumer demand has also facilitated more movement of goods, resulting in more electronic bills.
read:Decline in e-bill generation in June may affect GST collection in July
E-notes are electronic documents generated on the portal that prove the movement of goods and indicate whether taxes have been paid. As per Rule 138 of the CGST Rules, 2017, every registered person causing movement of goods (not necessarily due to supply) with a consignment value exceeding Rs 50,000 is required to generate an e-way bill. This is necessary for movement between two countries as well as within a country. However, a country or federal territory with a legislative body may decide on the threshold applicable to the value of goods moving within its territory.
There may be some impact on tax collection due to the increasing number of electronically billed bills, but there is evidence that an increase in the number of electronically billed bills will lead to an increase in tax collection. For example, e-way bill generation crossed an all-time high of Rs 9 crore in March, leading to collections reaching an all-time high of Rs 187 crore in April, according to GSTN data. In April, generation fell to Rs 844 crore; followed by collections in May of Rs 157 crore. Similarly, on a monthly basis, e-way bill generation rose to Rs 879 crore in July, but collections fell to Rs 159 crore in August. It is also possible that the movement of goods occurred in the same month as consumption or even one month before, which is why the generation of e-way bills may have an impact on the apportionment of collections over a two-month period.
Sandeep Sehgal, tax partner at tax and advisory firm AKM Global, said the increase in e-bill generation does indicate strong GST collections, which has also been seen in the past few months. The festive season will improve economic conditions by promoting higher economic activities and transactions. Gautam Mahanti, business director of IRIS Business Services, believes that the increase in electronic billing also means that the government may collect a large amount of tax (GST) in September.
“The fact that this coincides with reports (PMI data) of factories producing more products suggests that businesses are gearing up for festivals such as Ganesh Chaturthi, Dussehra and Diwali and will continue till Christmas. What is causing this surge Factors include increased compliance obligations and higher holiday inventories. In addition, lower sales thresholds for reporting wholesale transactions and improvements in cargo transportation also played a role in the economic growth.”
However, both Sehgal and Mahanti offer some caveats. “It is important to note that while the increase in e-bill generation is a positive sign, the overall economic situation depends on various factors beyond this, such as consumer spending, investment and government policies,” Sehgal said. Apart from this, Mahanti also listed challenges such as rising prices and high interest rates.