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How the NPCI’s FASTag system is being integrated with E-Way Bill System

The plan to integrate the N ational Payments Corporation of India’s (NPCI) FASTag payments system with the E-Way Bill (EWB) system has been in the works for over two years. Under this system, Goods and Services Tax (GST) officers will get real-time data on GST violations by businesses transporting goods, as their vehicles pass toll plazas.

Recently, the GST authorities have decided to integrate e-way bills (EWBs) with the FASTag payments system. The integration will give GST authorities the ability to check revenue leakages and compliance by businesses and traders transporting goods across geographies in real-time and for their inspections of suspected tax violato0rs, PTI reported.

Under the GST system, EWBs are essentially bills that need to be generated by a business before transporting or shipping goods within a state or inter-state. These bills need to be presented by the tax payer or transporter to GST officials as proof of transport of goods. These bills need to include details on the goods being transported, the recipient, consignor and transporter. From April 2018, the government made EWB generating mandatory for all goods valued over Rs 50,000 transported across states.

The plan to integrate FASTag with the EWB system has been in the works for over two years. According the Minutes of 32nd GST Council Meeting, which took place in January 2019, two expert panels were set up examine the efficacy and feasbility of integrating FASTag with EWBs. These expert panels recommended that the FASTag system should be integrated with the EWB system, with NPCI sharing the data, since the existing infrastructure was already present across major national highways.

In a presentation attached to the minutes, the two panels said that this integration would provide uniformity and interoperability, and would be advantageous to state governments and central tax authorities as they do not need to create an entirely new RFID-based system. They said that the NPCI would need to integrate the NETC system with the EWB system over NPCI Net, the NPCI’s main network.

How does FASTag Work?

FASTag is a payments system for vehicles to pay tolls automatically when moving across highways. While the government has mandated all vehicles, passenger and commercial, to enrol on to the FASTag payments system, the EWB-FASTag integration only impacts commercial vehicles. The FASTag system uses Radio-frequency identification (RFID) technology to auto debit the transporters’ bank account whenever their vehicle passes a toll plaza, which is affixed with a RFID scanner.

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NPCI FASTag Transaction Flow

How Will FASTag work with the EWB System?

From January 1, 2021, the government made it mandatory for all goods transporters to get a FASTag RFID tag on their vehicle and that the EWB would need to be uploaded to the RFID. When the vehicle passes a toll plaza, the RFID scanner scans the FASTag sticker on the vehicle and debits the transporters’ bank account for toll collections. By integrating EWBs with FASTag, the GST system will get real-time data on who is moving, what across national and state highways, and if they are GST compliant businesses/transporters.

According to the presentation attached to the 32nd GST Council meeting minutes, the system will work in the following manner:

  1. RFID scanners at toll plazas will scan the FASTag RFID tag on the vehicle entering the toll plaza
  2. The NPCI then processes the transaction
  3. If the e-toll system of the National High Authority of India is in use, the NPCI will share the RFID ID and vehicle data with the EWB server
  4. The EWB server will then retrieve the EWB generated by the business transporting the goods

According to a report titled E-way Bill – A journey of three years, on a daily basis an average 2.5 million goods are transported across 800 toll plazas against which EWBs are uploaded to the tax authority’s EWB system. In FY21, a total of 61.68 crore EWBs were generated of which only 2.27 crore were verified. In the last three years, a total of 180 crore EWBs have been generated of which only 7 crore were verified by tax officers.

The PTI report states that by integrating the EWB system with FASTag-RFID, tax officers will have live vigilance capabilities as they can identify vehicles not in compliance with the GST rules in real-time. The officers can catch any suspected vehicle or businesses that has not generated a EWB on the GST system when they pass through toll plazas. The report said that officers can also use these compliance reports when they conduct tax inspections and audits of suspicious businesses.

According to the 32nd GST Council meeting minutes, the FASTag-EWB system would operate at two stages:

  • Stage-1, or “passive risk-based intervention”: the integrated system would generate risk-based reports to be used tax by officers. These reports will also be used for ehicles crossing state borders, but with expired EWBs and for commercial vehicles cross toll plazas without an EWB.
  • Stage-2, or “active real time intervention”: the integrated system will create real time alerts. Oficers situated 200 metres down the road from the toll plaza will get real time data on whether a vehicle passing the toll plaza has a valid EWB or not. They will stop vehicles that do not have EWBs, and can seek invoices from the transporters when the EWB is valid.

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