India experienced a surge in electronic permits for goods shipments within and across states, reaching an all-time high of 93.4 million e-way bill generations in August. This high-frequency indicator reflects robust economic activity, potentially boosting Goods and Service Tax (GST) revenue collections in September.
The increased e-way bill data aligns with manufacturing Purchasing Managers’ Index (PMI) data for August, which indicated strong demand and output growth. The sharp rise in e-way bill generation suggests that businesses are accelerating supplies to the market as the festive season approaches.
In the past, a previous peak of 90.9 million e-way bill generations in March coincided with the highest-ever GST revenue collection of ₹1.87 trillion in April. Under the GST system, tax payments to the government for sales in a given month are made in the subsequent month.
Data from GSTN, the company responsible for processing GST returns, revealed that e-way bill generation in August increased by over 19% compared to the same period last year and by over 6% compared to the previous month.
M.S. Mani, a partner at Deloitte India, attributed the surge in e-way bill generation to increased compliance obligations and the build-up of festive stocking of goods, a trend that typically begins in August. He noted that this surge serves as a precursor to strong GST collections in September.
The onset of a series of festivals, starting with Onam in August and continuing through December, leads to heightened freight charges for truck shipments. Consequently, many businesses choose to stock up on supplies at the retail level in advance.
Moreover, since August 1, the sales threshold for businesses to report wholesale transactions on designated portals (e-invoicing) has been halved from ₹10 crore to ₹5 crore. This change has contributed to increased e-way bill generation activity for the transportation of goods, as e-invoice transaction data automatically feeds into other tax documents, including e-way bills and GST returns.
India’s government is relying on sustained consumption and investment demand to achieve the projected economic growth of 6.5% this year, despite macroeconomic challenges posed by high interest rates and inflation exceeding the Reserve Bank of India’s tolerance level.
In addition to the record e-way bill generation, official data from Indian Railways indicated a 6.38% growth in goods shipment and economic activity, with 126.95 million tonnes loaded in August compared to 119.33 million tonnes the previous year. Furthermore, the automotive retail sector experienced a robust 9% annual growth in August, with various vehicle categories showing improvement, thanks to the festive season and increased liquidity.