Covid-19 crisis: Govt extends validity of e-way bills; gives relief in ITC

The Centre has also deferred the application of restricted input tax credit (ITC) of 10% under goods and services tax (GST), providing relief to industry

The government has extended the validity of e-way bills that were set to expire during the 21-day lockdown, put in place to curb the spread of the coronavirus disease (Covid-19), addressing companies’ fears that their goods transported through trucks could be confiscated by the authorities.
 

The Centre has also deferred the application of restricted input tax credit (ITC) of 10 per cent under goods and services tax (GST), providing relief to industry, which has been struggling with cash flow. The validity of e-way bills that were set to expire between March 20 and April 15 has been extended till April 30 to help companies facing supply-related issues with orders stuck in transit in most cases.
 

“Where an e-way bill has been generated and its period of validity expires during the period 20th day of March, 2020 to 15th day of April, 2020, the validity period of such e-way bill shall be deemed to have been extended till the 30th day of April, 2020,” the finance ministry said in a notification issued late on Friday.
 

Under the GST regime, e-way bills have to be generated if goods worth over Rs 50,000 are transported.
 

Such a bill is valid for up to 24 hours for a distance of 100 km, depending on the size of the vehicle. However, if the vehicle does not cover 100 km within 24 hours, another bill has to be generated. For every 100 km travelled, the bill is valid for one additional day.
 

The Central Board of Indirect Taxes and Customs (CBIC) also deferred till August the application of 10 per cent restriction for availing ITC for February, and rolled over the cumulative applicability to September. The seven-month window will ease industry's working capital and cash flow.
 

To plug evasion, the GST Council had in December restricted ITC to 10 per cent of the eligible amount for an entity if its supplier has not uploaded relevant invoices detailing the payments made.
 

Abhishek Jain, partner EY, said with most e-way bills for stranded vehicles having expired, businesses were apprehensive about the possible interception of goods vehicles, which has now been done away with.
 

These moves will go a long way in reducing business disruption and ease cash flow issues for businesses in these challenging times, said Prashanth Agarwal, partner PwC. Deferment of reduced ITC is expected to provide relief to around 10 million taxpayers by providing them a little extra working capital, said Rajat Mohan, partner at AMRG Associates.
 

GST collections fell below the Rs 1-trillion-mark in March after four months, although disruption caused because of the lockdown will only be captured in the subsequent months.