One positive thing about the GST was an increase in the warehouse efficiency after GST implementation. This change has occurred because there would no longer be an interstate penalty on the movement of goods. However, what transpired instead was IGST collected on all inter-state flows of goods, which means that while there is not tax cost to a movement of an item, there is still a requirement to account, remit and claim IGST on each inter-state shipment.
So instead of a tax-free event, the interstate movement of goods is a taxable event while intra-state movements are tax-free and out of the scope of the GST. This creates a distinction between the two events which you must accurately track. Now until the institution of the e-way bill, this tracking had to occur solely through the tax invoices which were issued.
The e-way bill provides a separate way to track the movement of these goods. Remember that invoice are related to supply, but an e way bill is related to movement. Therefore, you cover a broader set of scenarios with the e way bill than merely the invoices. Generation of e-way bills can be consolidated to give you an eye into how goods can move through your organization.
For example, if goods come from overseas – then you can use the e way bills which can be linked to invoices, BOEs, and delivery challans to figure out how long goods take to go from the port to a shop or a factory. A sophisticated data tracking solution is needed to handle the task of linking possibly tens of e-way bills together and then maintaining a record of those e-way bills over the course of the movement of the item.
The alternative would be to try to keep track of these on spreadsheets and paper, but with that approach, you expose yourself to problems with ensuring that the correct data is coming through. Real e-way bill applications can ensure that the right data is created, transmitted and pulled down to give an accurate picture of goods movements intra-state or inter-state.
A warehouse can be a place where goods are staged before they are moved to customers. When a warehouse deals with items that are perishable or are purchased on credit, then you can use the e-way bill to ensure the items which were on the shelf or the longest time on credit are moved first rather than pulling new stock. This way you can reduce carrying costs for inventory by not accurately tracking inventory.
Remember e-way bills show:
The alternative would be to try to keep track of these on spreadsheets and paper, but with that approach, you expose yourself to problems with ensuring that the correct data is coming through. Real e way bill applications can ensure that the right data is created, transmitted and pulled down to give an accurate picture of goods movements intra-state or inter-state.
When goods arrive and leave?
What arrived, How it got there?
Also, e way bill information can be encoded into an RFID, which means that a sophisticated RFID on a pallet can be used to show a chain of transport for an item as it moves through a supply chain. The e-way bill more than the tax invoice, can companies figure out a way to make their warehousing more efficient?
GST has not led to efficiencies in warehousing yet, but the introduction of an e-way bill could help to jumpstart the change. If you can generate and track the e-way bills, then you now have a transparent way to see your inventory moving throughout your organization.