The buzz word in the B2C space today is ‘Dynamic QR code’. The B2C invoicing is different from the B2B e-Invoicing. However, the CBIC vide Notification No. 14/2020 – CT, dated 23rd March 2020 as amended by Notification No. 71/2020 – CT, dated 30th September 2020, prescribes that the businesses with an annual turnover of more than Rs. 500 crore in any preceding financial year should display Quick Response (QR) code on their B2C invoices with effect from 1st December 2020 (initially the due date to display B2C QR code was from 1st October 2020 but was delayed by Notification No. 71/2020). Further, the penalty for non-generation of the dynamic QR code for B2C transactions was waived till 30 September 2021 through various notifications.
The idea behind introducing a dynamic QR code for the lesser monitored B2C sector was formalizing the economy and migrating to a cashless economy. This would have a far-reaching impact in curbing tax evasion and restricting transactions in the parallel economy. It is notable that in the case of B2C supplies, the recipient is unregistered and is not able to avail credits.
Globally, dynamic QR code is becoming popular with various countries using them in their tax ecosystem. In 2020, the Portuguese tax authority mandated the requirement to include a 2D QR code on their invoices and pertinent tax documents. This measure was taken with the intent of stern scrutiny of tax transactions and for checking tax evasion, frauds, and parallel economy.
Switzerland has also introduced a dynamic QR code, namely the Swiss QR code. The said code contains payment information such as account holder, amount due, IBAN (or a special QR IBAN), and currency on their invoices. In Latin America, a QR code is required to be printed on a tax invoice. In Bolivia, the tax portal can be accessed through a QR link.
Journey of Dynamic QR code in India
A QR code has become an everyday part of our lives. At every grocery shop, it has become a common norm to find QR codes on billing counters. Most of the restaurants have also migrated their menus online with the help of QR codes, which when scanned on smartphones open QR code-based menus. QR codes are also used widely on social media.
Nobody can argue about the ease that QR code offers. Currently, for any contactless and cashless payment, we as customers scan QR codes on the cash counters which takes us to the supplier’s payment screen. However, we need to input the amount and remarks on the payment screen to complete the payment. This is called a static QR code. In the case of a dynamic QR code, a consumer needs to scan the QR code given on his invoice. As the name suggests, this QR code is dynamic and changes for every transaction. Essentially, the QR code would have details of the transaction such as amount, supplier’s GSTIN, bank account details, etc.
With the dynamic QR code made mandatory for specified businesses engaged in B2C supplies, consumers across the country are set to experience extremely easy payment processing. For the Government, this means transparency and formal transactions in the B2C segment that is highly prone to tax evasion.
Currently, the Government has prescribed taxpayers with an annual turnover of more than Rs. 500 crore to display QR codes on their invoices. The provision has excluded the following businesses for the time being from adhering to QR code provisions:
- Insurance and banking companies, financial institutions including an NBFC
- A GTA supplying services in relation to transportation of goods by road in a goods carriage
- Supplying passenger transportation service
- Supplying services by way of admission to the exhibition of the cinematograph in films on multiplex screens
- OIDAR supplies made by any registered person to an unregistered person
On 23rd February 2021, CBIC issued Circular no 146/02/2021-GST clarifying that dynamic QR Code should contain the following information:
- Supplier GSTIN number
- Supplier UPI ID
- Payee’s Bank A/C number and IFSC
- Invoice number & invoice date
- Total Invoice Value and
- GST amount along with breakup i.e. CGST, SGST, IGST, CESS, etc.
The Circular also clarifies that where the customer pays through credit/debit card or UPI or with cash, and the supplier provides a cross-reference of details of such payment on the invoice then it shall be deemed that the supplier has complied with the dynamic QR code provisions.
Moreover, the Circular states that in the case of pre-paid invoices i.e. where payment is received before the generation of an invoice, a cross-reference needs to be provided on the invoice, of the payment made through cash/electronic mode or a combination of both. This would be deemed as compliance with the legal provisions.