The Interconnected World of E-Way Bill,

E-Invoice, and GST Returns

~Akhil Pradeep
The implementation of the Goods and Services Tax (GST) has revolutionized the tax framework in
India. This paper explores the synergistic relationship between three pivotal components of this
framework: the e-way bill, e-invoice, and GST return. We delve into how these digital systems
streamline tax compliance, enhance transparency, and facilitate real-time tracking of transactions.

Introduction
In India’s GST regime, the e-way bill, e-invoice, and GST return are digital compliance mechanisms
that work in tandem to ensure tax transparency and prevent evasion. The e-way bill is an electronic
document required for the interstate and intrastate transportation of goods exceeding a certain value. It
facilitates the tracking of goods movement and aids in tax compliance. The e-invoice system mandates
the registration of B2B invoices on a centralized portal, generating a unique reference number for each
invoice, which ensures authenticity and enables input tax credit verification. The GST return is a
comprehensive statement filed by taxpayers detailing all taxable transactions within a period, which
includes data from e-way bills and e-invoices. This interconnected system allows for real-time data
sharing between different platforms, streamlining the process of tax filing and reducing the
administrative burden on businesses. It represents a significant step towards digitizing tax
administration and creating an efficient, paperless system that benefits all stakeholders in the economy.

E-Way Bill System

The e-way bill is an electronic waybill for the movement of goods, mandatory for consignments with a
value exceeding Rs. 50,000. It can be generated on the GST portal and is valid for a duration dependent
on the distance of transport. The e-way bill system has been pivotal in curbing tax evasion associated
with the transport of goods as it allows tax officials to access real-time data on goods movement.
Significance: The e-way bill is significant because it serves as proof of compliance with GST
regulations during the transport of goods. It helps in curbing tax evasion by providing visibility to tax
authorities on the movement of goods across states or within a state. By mandating the generation of e-
way bills for consignments above a certain value, it ensures that all taxable transactions are recorded
and taxed appropriately.

Operational Mechanism: To generate an e-way bill, the supplier or transporter must log into the GST
portal and provide details such as the consignor’s and consignee’s GSTIN, place of delivery, invoice or
challan number, value of goods, HSN code, and transport details. Once submitted, the system generates
a unique E-Way Bill Number (EBN) which accompanies the goods during transit. Transporters must
carry a copy of the e-way bill along with the goods being transported. Tax officials can verify these
documents at any point during transit to ensure compliance.
Integration with GST Returns: The integration of e-way bills with GST returns is a critical feature
that enhances the efficiency of tax administration. When an e-way bill is generated, its details are
automatically populated in the relevant sections of the taxpayer’s GST returns. This seamless
integration ensures that all information related to the movement of goods is accurately reflected in the
taxpayer’s return filings. It simplifies the reconciliation process for taxpayers as they do not have to
manually enter data related to each consignment.

This integration also aids tax authorities in cross-verifying reported sales with actual transport records,
thereby reducing discrepancies and potential fraud. The real-time data provided by e-way bills gives
authorities insights into supply chain activities, enabling better monitoring and enforcement of tax laws.

E-Invoice
The e-invoice, or electronic invoice, system is a transformative initiative under India’s GST framework
that mandates the generation of invoices in a standardized electronic format. This system is designed to
facilitate the seamless reporting of B2B (business-to-business) transactions to the GST portal.
Eligibility Criteria: Taxpayers with a turnover exceeding INR 5 crores in the financial year 2023-2024
are required to implement e-invoicing from the next financial year, i.e., from 1st April 2024 onwards
Process of Generating E-Invoices: The process begins with the seller creating an invoice in their own
accounting or billing system. This invoice must conform to the e-invoice schema (standard format)
prescribed by the GSTN (Goods and Services Tax Network). The seller then uploads this invoice onto
the Invoice Registration Portal (IRP), which acts as a central registrar. The IRP validates the details,
ensuring they are complete and conform to the set standards. Upon successful validation, the IRP
generates a unique Invoice Reference Number (IRN), digitally signs the invoice, and generates a QR
code containing essential details. The IRP then sends back the authenticated invoice with the IRN and
QR code to the seller. The seller can then issue this authenticated e-invoice to the buyer.
Benefits of Real-Time Data Capture: One of the primary benefits of e-invoices is real-time data
capture. As invoices are generated and authenticated in real-time, they are simultaneously shared with
both the GST portal and the buyer. This immediate capture of transaction data helps in reducing errors
and mismatches that can occur with manual data entry. It also aids in faster input tax credit verification
and reconciliation, as buyers have access to authenticated invoices promptly.
Cross-Verification with GST Returns: E-invoices are intricately linked with GST returns. The details
from e-invoices are auto-populated into GSTR-1 (the return document for outward supplies), which
simplifies the return filing process for sellers. For buyers, these details assist in reconciling their
purchase data with their GSTR-2A (auto-drafted inward supply statement), ensuring that they claim
input tax credits accurately.
This integration ensures that both sales and purchase transactions are reported consistently across all
documents, reducing discrepancies and potential fraud. Tax authorities benefit from this system as it
provides them with reliable and timely data, enabling better compliance monitoring and tax collection
efficiency.
GST Returns
Under the GST regime in India, the return filing process is a critical aspect of tax compliance, requiring
businesses to periodically submit information about their sales, purchases, and tax paid and collected.

Filing Process and Types of Returns: There are several types of GST returns that cater to different
types of taxpayers and transactions:

GSTR-1: Filed by regular taxpayers to report their outward supplies.

GSTR-2A: An auto-drafted statement reflecting inward supplies, which helps buyers in reconciling
their purchases.
GSTR-3B: A monthly summary return where taxpayers declare their tax liabilities and claim input tax
credits.
GSTR-9: An annual return that consolidates the data reported in the monthly/quarterly returns.
Taxpayers must file their returns electronically through the GST portal. The process involves logging
into the portal, navigating to the ‘Returns Dashboard’, selecting the financial year and return filing
period, and then filling in the required details or uploading relevant documents.

Data Reconciliation with E-Way Bills and E-Invoices: The integration of e-way bills and e-invoices
with GST returns is a significant feature for ensuring accurate tax reporting. When an e-way bill is
generated, its details are auto-populated into GSTR-1, which reduces manual data entry errors.
Similarly, e-invoices created for B2B transactions are automatically reflected in both GSTR-1 and
GSTR-2A.

Taxpayers must reconcile the data from e-way bills and e-invoices with their purchase and sales records.
This reconciliation ensures that all taxable transactions are accurately reported in the GST returns.
Discrepancies between reported data and actual transactions can lead to mismatches, which may result
in notices from tax authorities or denial of input tax credit claims.

The reconciliation process also involves matching input tax credits claimed in GSTR-3B with the credits
available as per GSTR-2A/2B (auto-drafted inward supply statements). This matching is crucial for
claiming accurate input tax credits and avoiding any potential tax liabilities.
Interconnectivity
The interconnectivity between GST-related systems, such as the GST portal, e-way bill portal, and e-
invoice portal, facilitates seamless data sharing and integration. This interconnectedness allows for real-
time data exchange, enhancing the efficiency of tax administration by enabling quick cross-verification
of transactions and reducing the scope for tax evasion.
For taxpayers, this integration simplifies compliance by automating data entry across platforms,
minimizing errors, and ensuring consistency in reporting. The shared data aids in reconciling invoices
and e-way bills with GST returns, streamlining the input tax credit process.
The impact on tax administration is profound; authorities gain access to a reliable audit trail, improving
oversight and enabling better compliance monitoring. This interconnected ecosystem fosters a
transparent and compliant business environment, ultimately increasing the ease of doing business and
fostering trust between taxpayers and the tax department.

Challenges and Solutions

The implementation of GST-related systems has faced several challenges, primarily around
technological readiness, taxpayer awareness, and system integration. Small and medium enterprises
(SMEs) have particularly struggled with transitioning to the digital requirements of GST due to limited
resources and technological infrastructure.

Solutions: To address these hurdles, the government and GSTN have taken proactive steps such as:

 Conducting extensive outreach and education programs to increase taxpayer awareness.

 Simplifying the e-invoice and e-way bill generation processes.
 Providing free accounting and billing software to small taxpayers.

Technological Advancements: Technological advancements play a pivotal role in improving system

integration. The adoption of AI and machine learning can automate data matching and anomaly detection,
reducing the need for manual intervention. Block chain technology could be leveraged to create a secure,
tamper-proof ledger of transactions, enhancing trust in the system.

Continuous improvements in the GST portal’s user interface and functionality make it more accessible and
user-friendly. The development of APIs for third-party applications allows for smoother data flow between
business software and GST systems, further easing compliance burdens.

Conclusion
In conclusion, the integration of e-way bills and e-invoices with GST returns represents a significant
leap in India’s tax administration. Despite initial challenges, technological advancements and
government initiatives have streamlined processes, ensuring better compliance and transparency. This
interconnected framework not only simplifies tax reporting for businesses but also fortifies the tax base,
paving the way for a more robust and efficient indirect tax system.