E-Way Bill System Under GST: Know Penalties and Consequences of Non-Compliance
Let’s take a detailed look at the E-Way Bill system under GST, covering its essentials, recent updates, compliance requirements, and penalties for non-compliance
The E-Way Bill system is a very important part of India’s Goods and Services Tax ( GST ) framework. The GST Act, 2017, mandates generating an e-way bill for transporting goods valued over Rs. 50,000 as mentioned under Section 68 of the Goods and Services Tax Act and Rule 138 of the associated rules. Non-compliance can lead to penalties and additional challenges. Here’s a detailed...
The E-Way Bill system is a very important part of India’s Goods and Services Tax ( GST ) framework. The GST Act, 2017, mandates generating an e-way bill for transporting goods valued over Rs. 50,000 as mentioned under Section 68 of the Goods and Services Tax Act and Rule 138 of the associated rules. Non-compliance can lead to penalties and additional challenges. Here’s a detailed overview, including recent updates, processes, penalties, and consequences.
What is an E-Way Bill?
An E-Way Bill ( Electronic Way Bill ) is a document generated electronically on the GST e-way bill portal for goods transportation exceeding Rs. 50,000 in value. It comprises:
Part A: GSTIN of the supplier and recipient, Place of delivery ( PIN code ), Invoice/Challan details and date, Value of goods, HSN code, and Transport document number or reason for transport.
Part B: Transporter details, such as vehicle number or transporter ID.
Once generated, a unique E-Way Bill Number ( EBN ) is shared with the supplier, transporter, and recipient, ensuring transparency across the supply chain.
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When is an E-Way Bill Required?
An e-way bill is required for the movement of goods exceeding Rs. 50,000 in value which is stipulated under Section 68 of the GST Act, 2017 and Rules 138,138A,138B,138C,138D of GST Rules. This applies to supplies such as sales, transfers, or exchanges, goods returned to the supplier, and inward supplies from unregistered persons. The bill is mandatory for inter-state transport of handicrafts and job-worker goods, regardless of their value, and for consolidated shipments exceeding Rs. 50,000 in total value.
Who Should Generate an E-Way Bill?
- Registered Persons: Responsible for generating the bill before moving goods.
- Unregistered Persons: When dealing with registered recipients, the recipient must comply with GST rules.
- Transporters: When the supplier has not generated the bill, the transporter must ensure compliance.
Exemptions: An e-way bill is not required for Non-motorized transport, Goods transported under customs supervision or bond, Defense consignments, Transport within 50 km from the business to weighbridges with a delivery challan, and Specific exempt goods as per state-specific rules.
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Consequences of Non-Compliance with E-Way Bill Rules
1. Monetary Penalties: Failing to comply with e-way bill regulations attracts severe financial fines:
- As per Section 122 of the CGST Act, transporting goods without a valid e-way bill results in a penalty of Rs. 10,000 or the tax sought to be evaded, whichever is higher.
2. Detention and Seizure of Goods: Goods transported without proper documents can be detained or seized under Section 129 of the CGST Act. To release the goods, the following penalties apply:
- 100% of the tax payable if the owner agrees to pay.
- 50% of the goods’ value if the owner disputes the tax liability.
3. Supply Chain Disruptions: Non-compliance disrupts business operations by causing:
- Delays in transportation and delivery, lead to dissatisfied customers.
- Vehicle detention which creates operational inefficiencies.
- Reputational damage and potential legal issues with clients or stakeholders.
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E-Way Bill Penalties for Minor Mistakes
The government allows leniency for small errors in e-way bills, as per Circular No. 64/38/2018-GST:
- Penalty Amount: Rs. 1,000 (Rs. 500 under CGST and Rs. 500 under SGST).
- Applicable for spelling errors in names, PIN codes or address mistakes that don’t affect delivery and minor inaccuracies in vehicle numbers or HSN codes (up to 1-2 digits).
These provisions are meant to avoid undue penalization for honest mistakes.
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Additional Penalties for Non-Compliance
Transporting Goods Without Paying Tax and Valid Documents
- Penalty: 100% of the applicable tax on goods’ value.
- For exempt goods: 2% of the goods’ value or Rs. 25,000, whichever is lower.
Transporting Goods Without Valid Documents (Tax Paid)
- Penalty: 50% of the goods’ value.
- For exempt goods: 5% of the goods’ value or Rs. 25,000, whichever is lower.
| Category | Details | Penalty/Requirement |
| Monetary Penalties | Transporting goods without a valid e-way bill. | Rs. 10,000 or the tax sought to be evaded, whichever is higher. |
| Detention & Seizure | Goods moved without valid documents can be detained or seized. | 100% of tax payable if the owner agrees to pay.50% of goods’ value if the owner disputes liability. |
| Minor Mistakes | Errors like spelling mistakes, PIN/address errors, or minor inaccuracies in vehicle/HSN codes. | Rs. 1,000 total (Rs. 500 CGST + Rs. 500 SGST). |
| No Tax & No Documents | Transporting goods without paying tax and valid documents. | 100% of tax payable.Exempt goods: 2% of value or Rs. 25,000 (whichever is lower). |
| Tax Paid, No Documents | Transporting goods with tax paid but no valid documents. | 50% of goods’ value.Exempt goods: 5% of value or Rs. 25,000 (whichever is lower). |
E-Way Bill Enforcement Mechanism
To ensure compliance, enforcement officers perform:
- Vehicle Verification: Officers inspect vehicles based on credible information about tax evasion and Inspections are recorded in Form GST EWB-03 (Parts A and B).
- Inspection Rules: A vehicle cannot be re-inspected unless there is new information about possible tax evasion.
Role of Transporters: Transporters are critical to ensuring compliance with e-way bill rules. They must:
- Carry valid GST invoices, delivery challans, and e-way bills during transit.
- Update Part B with new vehicle details if transportation arrangements change.
- Report delays of over 30 minutes in Form GST EWB-04 to avoid penalties.
Recent Updates to the E-Way Bill System
1. Mandatory Multi-Factor Authentication ( MFA ): From 1st April 2025, all taxpayers must use Multi-Factor Authentication (MFA) for accessing the e-way bill and e-invoice portals. MFA involves using:
- A password and an OTP are sent to a registered mobile number.
Early Rollout Schedule:
- Businesses with AATO > ₹20 crores: Mandatory from 1st January 2025.
- Businesses with ₹5-20 crores turnover: Mandatory from 1st February 2025.
2. Restrictions on E-Way Bill Generation for Older Invoices: Starting 1st January 2025, e-way bills cannot be generated for documents older than 180 days. For instance, invoices dated before 5th July 2024 will become ineligible.
3. Limitations on Validity Extensions: Extensions for e-way bills will be capped at 360 days from the original generation date. This ensures timely completion of goods movement and prevents indefinite extension abuse.
4. Record High E-Way Bill Generation: August 2024 saw 10.54 crore e-way bills generated, reflecting stricter compliance and enhanced awareness among taxpayers.
Read the full story about the recent updates here.
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