Impact of E-way Bill on FMCG Sector

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30 Dec 2020

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One of the most important sectors in the Indian market is the Fast Moving Consumer Goods (FMCG). The FMCG sector is engaged in short to medium term shelf life non-durable goods, which are usually of lower value. Milk and milk goods, rice and pulses, vegetables and fruits, soaps and shampoos, perfumes and deodorants, etc are examples of this. With the implementation of GST in India, the FMCG sector has become one of the greatest beneficiaries. To allow the smooth movement of goods for interstate and intrastate supplies, the e-way bill was introduced in 2018.

What is meant by an E-Way Bill?

E-Way bill is an electronic document created by an unregistered individual when there is a supply/return or inward supply of commodities. There are various conditions under which w-way bills are produced. Following are the impacts of e-way bill on FMCG sector of India:

● Simplifying Complex Taxation Systems

In India, the FMCG industry operates a complex distribution structure consisting of many layers of small distributors between the enterprise and the ultimate consumer. As the number of stock-keeping units (SKU) increases exponentially, it is a nightmare for businesses to ensure the supply of products at the final stage of delivery and the complicated taxation system in India is contributing to the suffering. Within this, fluctuating local tax systems enable traders to engage in the smuggling of goods across states, contributing to the development of gray markets.

In addition, because of the inter-state sales tax, businesses are forced to first move the goods on a consignment basis to state-level warehouses and then supply their goods to end-customers. Harmonization of the complexities involved in the procurement of products through the states would be accomplished with the implementation of the GST and e-way bill, and FMCG businesses would see changes in the management of their supply chains.

● E-Way Bill Roll Out

The Union Government has made the e-way bill mandatory for transporters with goods with values exceeding INR 50,000 from one state to another to keep up with tax reforms. A single e-way bill could be produced for multiple deliveries over the same trip to reduce the burden of e-commerce companies. The introduction of the e-way bill will add clarity and quality to the transportation of goods in the States. Organized industries such as FMCG, Pharma, Infrastructure, Manufacturing, etc will have access to the WEP platform with different features such as ERP integration, multi-location and multi-organization centralized management, bulk EWB generation for a secure, fast and easy-to-use e-way bill generation facility.

The e-way bill could be created by modes such as web, SMS, android app, bulk upload tool and site-to-site integration based API, etc. Transporters may build multiple sub-users and assign them roles. With this the major carriers were able to declare their different offices as sub-users. There are also provisions for the cancellation of the e-way bill by a person who created the e-way bill in the first place within 24 hours. The beneficiary could also reject the e-way bill by the consignor within 72 hours of its generation, whichever is the earliest.

● Latest E-Way Bill Changes

The Union Government has updated the rules of the e-way bill to assist FMCG companies in the smooth movement of goods and to promote the process of measuring the value of goods as well. As a major relief to the FMCG undertakings, the government has permitted undertakings to accept the sole value of the taxable supply to produce the e-way bill in cases where the sales invoice contains both the exempted supply and the taxable supply of products.

It means that if food products which are subject to GST are shipped along with goods which are excluded, such as milk, the value of food products should be regarded only for the purposes of the e-way bill. In addition, for the transportation of goods up to 50 km, vehicle specifics would not be required to support smaller companies operating within any specific state. As per new amendments, the validity of the e-way bill will now be until the midnight of the day immediately following the date of registration.

● Bulk Facility for E-Way Bill Registration

The e-way bill login portal saw more than 2 lakh e-way bills produced on a day-to-day basis when trial implementation of the e-way bill was launched. A time-saving and easy system like this would be preferred by big business houses or logistic operators with multiple consignments across the nation on a daily basis. With the bulk facility of e-way bills registration on the e-way bills platform, this has been made possible.

● Facility for Sub-Users

In a corporation, with regard to acquisitions, sales operations, etc., there are many stakeholders managing business activities. The e-way bill is no exception to that. In certain cases, taxpayers may need to generate e-way bills from many locations where their companies are managed. They may need to generate a large number of e-way bills in different time shifts, or they may even need to generate a number of e-way bills at the same time, all of which may require additional resources for their implementation. The e-way bill login portal provides organizations with a provision to solve all of this, where they can build multiple sub-users of the e-way bill, delegate positions to them and also easily manage all sub-users with access to a portal.

Many FMCG companies create production units in states that provide benefits such as tax holidays, discounts, subsidies, etc. This suggests that businesses will have to set up warehouses in other states to cater to the needs of customers. The cost of the supply chain will be lower with the reduction of barriers and control posts for the inter-state supply of goods, and the time taken to deliver the goods will also be shorter. The e-way bill would decrease the amount of controls carried out by tax authorities. To assist small businesses, the government has notified that if the distance involved in the transportation of goods does not exceed 50 kms for intra-state supplies, the supplier is not allowed to include the transporter's information in the e-way bill.

Know about the impact of E-way bill on logistics industry.

The pandemic struck and hit the Indian economy hard. To revive the economy, successful and widespread steps for revival are being taken. There is, however, no easy and straightforward way to quantify or monitor the state of recovery. E-way bills can provide an excellent indicator, especially if there is a robust database of small and micro industries and enterprises. On Finserv MARKETS, the exclusive financial services marketplace, you can learn how to generate e-way bills through the e-way bill login portal. It will be a great choice if you are interested to know more about it.

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