E-way bill generation surged to 8.79-cr in July, aiding in better GST mop-up

E-way bill generation surged to 8.79 in July as against 8.61 in June, showing better demand. This could also have a positive impact on GST collection, which saw a third all-time high of ₹1.65 lakh crore in July.

The date for GST collection for August will be out on September 1. Apart from higher e-way bill generation, performance in the services sector has also been encouraging, as a quick survey-based index (Purchasing Managers’ Index for Services) rose to 13 years high of 62.3 in July. All of these could help in sustaining momentum or even accelerating it.

E-way bill is an electronic document generated on a portal, evidencing the movement of goods and indicating whether tax has been paid. As per Rule 138 of the CGST Rules, 2017, every registered person who causes the movement of goods (which may not necessarily be on account of supply) of consignment value of more than ₹50,000 is required to generate an e-way bill. This is required for movements between two States as well within a State. However, a State or UT with the legislature can decide the threshold for the value of goods to be applicable for movement within its boundary.

• Also read: Kerala gold & silver merchants oppose e-way bill

Though there is no direct correlation between e-way bill generation and GST collection, still there is evidence indicating higher generation of e-way bills would lead to higher collection. Data from GSTN (the IT backbone of indirect tax levy) shows e-way bill generation crossed an all-time high of 9 crore in March, resulting in the all-time collection in April at ₹1.87 lakh crore. In April, the generation came down to 8.44 crore; subsequent collection in May was ₹1.57 lakh crore.

In May, e-way bill generation rose to 8.82 crore and collection in June was over ₹1.61 lakh crore. However, e-way bill generation came down to 8.61 crore in June, yet collection went up to ₹1.65 lakh crore in July. It is also possible that the movement of goods might have occurred in the same month of consumption or even a month before that, which is why e-way bill generation may have an impact on collection spreading over two months.

• Also read: GST council to consider making e-way bill mandatory for gold, precious stones

Experts say that, though monthly growth in GST collection saw a bit of a decline, they are hopeful o better collection during the current fiscal. Aditi Nayar, Chief Economist at ICRA said there is a clear divergence between revenues from collections on account of domestic transactions (including imports of services) and those on account of imported goods, with the latter averaging just 0.8 per cent y-o-y during April-July 2023, reflecting the compression in merchandise imports. This divergence is expected to continue owing to the anticipation of a contraction in merchandise imports in FY24.

“GST collections need to exceed ₹1.65 lakh crore/month in the remaining eight months of this fiscal to meet the FY24 target for CGST revenues of ₹8.1 lakh crore, which seems realistic,” she said. 

Gautam Mahanti, Business Head, IRIS Business Services, a private GST e-invoice service provider, said, “The buoyancy in the state of the economy is expected to continue, giving a fillip to the increasing collections in the coming months.”