New

Published on:

January 26, 2025

Shaaransh Sharma

Blog |

Explore GST

GST FAQs

Recent Updates on E-Way Bills in India

‍Implementation of Multi-Factor Authentication (MFA)

The E-Way Bill (EWB) system is an integral part of India’s GST ecosystem, facilitating tracking of goods in transit across states, in close to real-time. It has been routinely updated over the years to improve its security and performance. In a move to enhance security, the National Informatics Centre (NIC) is implementing Multi-Factor Authentication (MFA) for the E-Way Bill and E-Invoice systems.

What is Multi-Factor Authentication (MFA)?

MFA (Multi-Factor Authentication) is where the user is required to authenticate through more than one form of identification, and most of the time it is a combination of what they know (password) with what they have (a one-time password sent to the registered mobile number / App).

Key Dates for MFA Implementation:

Applicable from 01.01.2025: Compulsory for AATO ₹20 Crores and above taxpayers

February 1, 2025: Compulsory for taxpayers whose AATO is above ₹5 Crores.

April 1, 2025: Mandatory for all other taxpayers and users from

By changing these dates, taxpayers are in advance are encouraged to really activate MFA to make the most of this transition. Full details are here on the E-Invoice and E-way Bill portals. Make sure to enter the latest mobile number as otp will be sent on that.

2. Restriction on E-Way Bill Generation Based on Document Date

According to the release, the Ministry of Finance has announced that E-Way Bills could not be generated for documents older than 180 days w.e.f. January 1, 2025. This can be done by making sure that for any invoices or related documents dated before July 5, 2024, the EWB generation will be restricted post the start of the new period.

EWBs are to be generated on time; businesses should never allow their EWBs to be generated at the time invoices or amazement-related documents are used.
EWB will automatically validate that the GST document date is equal to today to comply with this requirement.

The goal there is to clean up things in the EWB system to maintain the correctness of data, less data discrepancies due to expired documents.

3. Limitation on E-Way Bill Validity Extension

The validity of an E-Way Bill can be extended in specific circumstances, like delays due to a natural calamity or a vehicle breakdown. But those extensions will be capped at 360 days after the EWB date for any date on or after Jan. 1, 2025.

Example:

1. EWB created on 1st Jan 2025 can only be extended up to 25th December 2025.

Implications:

1. Implementation of the Plan: The businesses and transporters need to arrange the logistics for the goods to arrive at the scheduled extended time.

2. Note: There will be a penalty for invalid EWB during the movement of goods due to this restriction.

Now this update allows the extension facility to curb abuses and allow movement in and out of goods within a sensible period of time.

4. Mandatory E-Invoice Generation Before E-Way Bill for Certain Transactions

To simplify the integration of E-Invoice with the E-Way Bill system, The government has already implemented the E-Invoice generation before the update of EWB for Business to Business (B2B) and Business to Export (B2E) for taxpayers who generate e-invoice mandatory. This requirement will apply starting March 1, 2024.

Implications:

One-time System Integration: Also, taxpayers are required to integrate their current invoicing system with the E-Invoice portal, enabling it to automatically generate EWB on E-invoice to facilitate their movement.
Compliance: The system will block the generation of an EWB, in case the e-invoice is not available against the corresponding transaction.

The goal of this project is to automate the documentation process and improve the quality of the data reported to both systems.

5. Reporting of HSN Codes in E-Way Bills

To homogenize the reporting of products, the administration has required that Harmonized System of Nomenclature (HSN) codes be included in E-Way Bills. Taxpayers whose turnover was above Rs 5 crore had to report 8-digit HSN codes; other taxpayers were required to provide 4-digit and 2-digit HSN codes, respectively.

Implications

The HSN Code should be reported without any errors: Reporting accurate HSN codes enables the government to classify goods correctly, which is vital for tax matters.
System Validation: The EWB system itself will validate the HSN codes entered.

Taxpayers also need to revisit their product classification in all the relevant documents and ensure that any change in applicable HSN codes is factored in.

6. Advisory on Verification of Transporter ID

For standardization in reporting platforms of goods, the administration has mandated the inclusion of Harmonized System of Nomenclature (HSN) codes in E-Way Bills. For 8-digit HSN codes, taxpayers whose turnover was in excess of Rs 5 crore were required to disclose; 4-digit and 2-digit HSN codes were to be furnished by other taxpayers.

Implications:

Correct HSN Code: Correct HSN codes allow the government to classify all goods, which is important in terms of tax.
HSN Code Validation: The EWB system will validate the HSN codes as entered by the user.

Taxpayers will also need to examine the classification of their products in all relevant documents and take note of changes in applicable HSN codes.

7. Enhancements in E-Way Bill System Features

The E-Way Bill system gets several new features for better user experience and system efficiency. These improvements make tracking, compliance, and usability easier.

Dynamic QR Code for Verification: Readily verifiable by enforcement officers.
Automatic Vahan without Validation: Checks the vehicle from the Vahan Database to check the correct vehicle entry.
Expiring EWBs Real-Time Alerts: Notifies users about expiring EWBs.
Enhanced Dashboard Analytics: Ability to pull EWB trends and track compliance.

8. Integration with the FASTag and RFID Systems

The integration of the EWB system with the FASTag and Radio Frequency Identification (RFID) technologies have been enhanced by the government.

Implications

Automatic Updates At Toll Plazas: RFID readers will track your live location
Enhanced Efficiency of Enforcement: This is mainly for deputed vehicles with valid EWBs.

9. Stricter Penalties for Non-Compliance

Recently, with the new updates, GST authorities have highlighted stricter penalties for delayed compliance, including penalties for expired EWBs, abuse of the extension facility, and usage of fake EWBs.

10. Training and Awareness Programs

Plus, as integration happens with government systems and public systems viz their goods and services taxes, the strength of compliance and interface with the solutions to common issues faced, and preparing stakeholders for these changes is key. So the government is now putting in place recording and awareness programs.

Conclusion

These E-Way Bill amendments are the government's effort to tighten the screws on the GST model. Given all these changes, businesses are advised to be cognizant of the updates and comply on time to contribute to a flourish and game-changing tax ecosystem in India.

FAQs

What is the purpose of Multi-Factor Authentication (MFA) in the E-Way Bill system?

MFA requires 2 means of verification; a password and a one-time password sent to a registered mobile number.

When will MFA become mandatory for taxpayers?

MFA will be compulsory for taxpayers with AATO above ₹20 Crores from January 1, 2025, and for all taxpayers by April 1, 2025.

What are the restrictions on E-Way Bill generation based on document dates?

To ensure data validity, E-Way Bills would not be generated for invoices/documents which are more than 180 days old effective from the 1st of Jan 2025.

How does integration with FASTag and RFID improve the E-Way Bill system?

The integration facilitates automatic tracking at toll plazas and real-time location updates, while also improving the efficiency of enforcement actions for vehicles transporting goods that have valid E-Way Bills.