Dynamic QR Code on B2C Invoices Under GST

1. The CBIC vide Notification No. 14/2020-Central Tax, as amended by Notification No. 71/2020-Central Tax mandates that the taxpayers with an annual turnover of more than Rs.500 crore in any preceding financial year (starting from 2017-18) are compulsorily required to display QR (Quick Response ) code on their B2C invoices from 1st December 2020 (initially was from 1st October 2020 but was deferred by the Notification No. 71/2020).

2. Further, vide Notification No. 89/2020- Central Tax; dated 29th November 2020, the penalty has been waived for non-compliance with the provisions of Notification No. 14/2020-Central Tax for the period from 01st December 2020 to 31st March 2021, subject to the condition that the said person complies with the provisions of the said Notification from 01st April 2021.

3. QR (Quick Response) Code: Quick Response Code is abbreviated as QR code. It is a two-dimensional barcode applied to items for presenting information in its machine-readable format and can be scanned from any mobile device

4. Dynamic QR Code: A dynamic QR code is editable and allows additional features such as scan analytics, password protection, device-based redirection, and access management

4.1 The purpose of having a dynamic QR code on B2C invoices is to facilitate digital payments. The RBI recommendations related to streamlining payments also need to be factored in while deciding the approach to define the QR Code for B2C transactions.

5. Generation of Dynamic QR Code: A taxpayer can generate QR code for B2C invoices using their own QR code generating machines and algorithms.

6. Contents / Parameters of Dynamic QR Code CBEC vide circular No. 146/02/2021 dated 23 Feb 2021 has clarified the parameters/ details which are required to be captured in the Quick Response (QR) Code.

6.1 According to Para 2 of the said circular, the dynamic QR Code is required to contain the following information: –

(a) Supplier GSTIN number

(b) Supplier UPI ID

(c) Payee’s Bank A/C number and IFSC

(d) Invoice number & invoice date,

(e) Total Invoice Value and

(f) GST amount along with breakup i.e. CGST, SGST, IGST, CESS, etc.

6.2 Further, Dynamic QR Code should be such that it can be scanned to make a digital payment

7. Non Applicability Notification No 14/2020- Central Tax dated 21st March 2020 for displaying dynamic QR Code is not applicable to an invoice where the supplier of taxable service is:

(a) An insurer or a banking company or a financial institution, including a non-banking financial company.

(b) A goods transport agency supplying services in relation to transportation of goods by road in a goods carriage.

(c) Supplying passenger transportation service.

(d) Supplying services by way of admission to the exhibition of the cinematograph in films on multiplex screens

7.2 The requirement to display a dynamic QR Code is not applicable to OIDAR supplies made by any registered person to an unregistered person.

8. Export Invoices: The dynamic QR Code is not required to be displayed on invoices issued for supplies made for Exports.

8.1 CBEC vide Para 1 of the circular. No. 146/02/2021 dated 23 Feb 2021 has clarified that, though exports 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. Hence the Notification No 14/2020- Central Tax dated 21st March 2020 for dynamic QR Code will not apply to the Export invoices.

9. Deemed Compliances: In cases where the supplier has digitally displayed the Dynamic QR Code and the customer pays for the invoice, using any mode like UPI, credit/ debit card or online banking or cash or combination of various modes of payment, with or without using Dynamic QR Code.

9.1 The said invoice shall be deemed to have complied with the requirement of having a Dynamic QR Code if the supplier provides a cross-reference of the payment (transaction id along with the date, time and amount of payment, mode of payment like UPI, Credit card, Debit card, online banking, etc.) on the invoice.

9.2 Similarly, where the customer pays in cash, without using Dynamic QR Code and the supplier provides a cross-reference of the amount paid in cash, along with the date of such payment on the invoice. The said invoice shall be deemed to have complied with the requirement of having a Dynamic QR Code.

10. Cross Reference of payment on Invoice: Where the dynamic QR Code is not displayed on the invoice but 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 and the details of the merchant as well as the transaction are displayed/ captured.

10.1 The invoice shall be deemed to comply with the requirement of the dynamic QR Code if the cross-reference of the payment made using such electronic modes of payment is made on the invoice.

10.2 However, if payment is made after generation/issuance of the invoice, the supplier shall provide a Dynamic QR Code on the invoice.

11. Pre-Paid invoice The generation/ printing of Dynamic QR Code on B2C invoices are not mandatory for pre-paid invoices i.e. where payment has been made before issuance of the invoice.

11.1 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.

11.2 However, in cases other than pre-paid supply i.e. where payment is made after generation/issuance of the invoice, the supplier shall provide a Dynamic QR Code on the invoice.

12. Supply thru E-Commerce Operator: Once the E-commerce operator (ECO) or the online application has complied with the Dynamic QR Code requirements, the suppliers using such an e-commerce portal or application for supplies are still be required to comply with the requirement of Dynamic QR Code.

12.1 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.

12.2 In case, the supplier is making supply through the e-commerce 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.

12.2 In cases other than pre-paid supply i.e. where payment is made after generation/issuance of the invoice, the supplier shall provide a Dynamic QR Code on the invoice.

13. QR Code on B2C transactions is not a new concept and is not related to e-invoice mandate. QR Code requirement had also been notified under Income Tax Act and to be followed as per the conditions prescribed.

*****

Disclaimer: The article is for informative purposes only.

The author can be approached at caanitabhadra@gmail.com