1.0 Background: All supplies made to unregistered persons or consumers are referred to as B2C transactions. B2C invoices are those invoices where the end-user will not be claiming input tax credit (ITC).
CBIC vide Notification No. 14/2020-Central Tax directs all taxpayers with an annual turnover of more than Rs.500 crore in any preceding financial year (starting from 2017-18) to compulsorily generate a Dynamic QR code on their B2C invoices from 1st December 2020 (initially was from 1st October 2020 but was deferred by the Notification No. 71/2020).
Further, vide notification No. 06/2021-Central Tax, dated 30th March 2021, penalty has been waived for non-compliance of this requirement for the period from 1st December, 2020 to 30th June, 2021, subject to the condition that the said person complies with the provisions of the said notification from 1st July, 2021. CBIC has also issued Circular no. 156/12/2021-GST, dated 21.06.2021 & Circular No. 146/2/2021-GST, dated 23.02.2021 to clarify various issues raised by the trade on Dynamic QR Code.
2.0 What is Dynamic QR Code?
A QR code is a quick response code. It contains coded information about an e-invoice. It is a two-dimensional version of a barcode and can be scanned from any mobile device. B2C QR code has to be self-generated by the taxpayer. The main motto of generating QR codes for B2C e-invoices is to promote digitalization of payments using any UPI. A dynamic QR code is editable and allows additional features such as scan analytics, password protection, device-based redirection and access management. It provides a less dense QR code image, which is more reliable to scan.
3.0 How to issue Dynamic QR Code?
Under B2C invoices, a taxpayer can generate QR code using their own QR code generating machines and algorithms. Dynamic QR Code is required, inter-alia, to contain the following information: –
Further, Dynamic QR Code should be such that it can be scanned to make a digital payment.
4.0 Non-applicability: Notification No. 14/2020-Central Tax for displaying dynamic QR Code is not applicable to an invoice issued where the supplier of taxable service is:
The requirement to display a dynamic QR Code is not applicable to OIDAR supplies made by any registered person, who has obtained registration under section 14 of the IGST Act 2017, to an unregistered person.
5.0 Applicability on Exports
Circular No. 146/2/2021-GST, dated 23.02.2021 clarifies that for the supplies made for exports, though such supplies are made by a registered person to an unregistered person, however, as e-invoices are required to be issued in respect of supplies for exports, in terms of Notification no. 13/2020-Central Tax, dated 21st March, 2020 treating them as Business to Business (B2B) supplies, Notification no. 14/2020- Central Tax, dated 21st March, 2020 will not be applicable to them.
6.0 Deemed Compliance
If the supplier has issued invoice having Dynamic QR Code for payment, the said invoice shall be deemed to have complied with Dynamic QR Code requirements. In cases where the supplier, has digitally displayed the Dynamic QR Code and the customer pays for the invoice: –
The said invoice shall be deemed to have complied with the requirement of having Dynamic QR Code.
7.0 Cross reference of the payment on Invoice:
Where although Dynamic QR Code is not displayed, but the details of merchant as well as transaction are displayed otherwise & the supplier makes available to customers an electronic mode of payment like UPI Collect, UPI Intent or similar other modes of payment, through mobile applications or computer-based applications.
In such cases, if the cross reference of the payment made using such electronic modes of payment is made on the invoice, the invoice shall be deemed to comply with the requirement of Dynamic QR Code. However, if payment is made after generation / issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.
8.0 Pre-paid invoices: Generation/ printing of Dynamic QR Code on B2C invoices is not mandatory for pre-paid invoices i.e. where payment has been made before issuance of the invoice. If cross reference of the payment received either through electronic mode or through cash or combination thereof is made on the invoice, then the invoice would be deemed to have complied with the requirement of Dynamic QR Code.
However, in cases other than pre-paid supply i.e. where payment is made after generation / issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.
9.0 Supplies through E-commerce: Once the E-commerce operator (ECO) or the online application has complied with the Dynamic QR Code requirements, the suppliers using such e-commerce portal or application for supplies will still be required to comply with the requirement of Dynamic QR Code.
The provisions of the notification shall apply to each supplier/registered person separately, if such person is liable to issue invoices with Dynamic QR Code for B2C supplies as per the said notification. In case, the supplier is making supply through the Ecommerce portal or application, and the said supplier gives cross references of the payment received in respect of the said supply on the invoice, then such invoices would be deemed to have complied with the requirements of Dynamic QR Code.
In cases other than pre-paid supply i.e. where payment is made after generation / issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.
10.0 Supplies to persons holding Unique Identity Number (UIN): Dynamic QR Code is required to be provided on an invoice, issued to a person, who has obtained a Unique Identity Number as per Section 25(9) of CGST Act 2017.
Any person, who has obtained a Unique Identity Number (UIN) is not a “registered person” as per the definition of registered person provided in section 2(94) of the CGST Act 2017. Therefore, any invoice, issued to such person having a UIN, shall be considered as invoice issued for a B2C supply and shall be required to comply with the requirement of Dynamic QR Code.
11.0 Bank account and IFSC details on Invoice: Given that UPI ID is linked to a specific bank account of the payee/ person collecting money, separate details of bank account and IFSC may not be provided separately in the Dynamic QR Code.
12.0 Payment collected by other than the supplier: In cases where the payment is collected by some person other than the supplier, including E-Commerce operator or any other person authorized by the supplier on his/ her behalf, in place of UPI ID of the supplier, the UPI ID of such person, who is authorized to collect the payment on behalf of the supplier, may be provided in the Dynamic QR Code.
13.0 Service recipient located outside India but Place of Supply is in India: In cases, where recipient of services is located outside India, and payment is being received by the supplier of services in foreign exchange, through RBI approved modes of payment, but as per provisions of the IGST Act 2017, the place of supply of such services is in India, then such supply of services is not considered as export of services as per the IGST Act 2017;
In such cases, the Dynamic QR Code is not required on the invoice issued for such supply of services as such dynamic QR code cannot be used by the recipient located outside India for making payment to the supplier.
14.0 Over-the-counter (OTC) Retail Sales:
In some instances of retail sales over the counter, the payment from the customer in received on the payment counter by displaying dynamic QR code on digital display, whereas the invoice, along with invoice number, is generated on the processing system being used by supplier/ merchant after receiving the payment. In such cases, it may not be possible for the merchant/ supplier to provide details of invoice number in the dynamic QR code displayed to the customer on payment counter. However, each transaction i.e. receipt of payment from a customer is having a unique Order ID/ sales reference number, which is linked with the invoice for the said transaction.
In such cases, where the invoice number is not available at the time of digital display of dynamic QR code in case of over the counter sales and the invoice number and invoices are generated after receipt of payment, the unique order ID/ unique sales reference number, which is uniquely linked to the invoice issued for the said transaction, may be provided in the Dynamic QR Code for digital display, as long as the details of such unique order ID/ sales reference number linkage with the invoice are available on the processing system of the merchant/ supplier and the cross reference of such payment along with unique order ID/ sales reference number are also provided on the invoice.
15.0 Part payment of invoice through advance, voucher, discount, etc.:
The purpose of dynamic QR Code is to enable the recipient/ customer to scan and pay the amount to be paid to the merchant/ supplier in respect of the said supply. When the part-payment for any supply has already been received from the customer/ recipient, in form of either advance or adjustment through voucher/ discount coupon etc., then the dynamic QR code may provide only the remaining amount payable by the customer/ recipient against “invoice value”.
The details of total invoice value, along with details/ cross reference of the part payment/ advance/ adjustment done, and the remaining amount to be paid, should be provided on the invoice.
Disclaimer: The article is for informative purposes only.
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