In an attempt to reduce GST evasion and increasing business efficiency, the government had introduced an e-invoicing system. It is a standardized system that enables reporting of the B2B, and Export invoices being issued by the taxpayers to their customers on the government portal and obtaining a unique Invoice Reference Number (IRN).
E-invoicing provisions were introduced in a phased manner beginning with the rollout of e-invoicing from 1st October 2020 for businesses having aggregate turnover exceeding Rs. 500 crores in any of the financial years beginning from F. Y. 2017-18. The 2nd & 3rd phase implementation of e-invoicing provisions have been depicted image below.
Applicability of E-Invoicing Provisions in Phased Manner
Furthermore, a dynamic QR (Quick Reference) code was required to be printed on all business to customers (B2C) tax invoices issued by a registered taxable person having aggregate turnover exceeding Rs. 500 crores during any of the financial years beginning from F.Y 2017-18.
Initially, the dynamic QR code was required to be mentioned w.e.f. 1st April 2020 vide notification number 72/2019 – Central Tax but it got postponed to 1st October 2020 and further postponed to 1st December 2020 vide notification number 14/2020 and notification number 71/2020 respectively due to the pandemic-like situation in the country and the businesses were not ready to implement the same technologically.
As part of providing relief to the taxpayers, notification number 89/2020 and notification number 06/2021 were issued waving of penalty under Section 125 of the CGST Act, 2017 from 1st December 2020 to 30th June 2021 for taxpayers issuing tax invoices without dynamic QR code for B2C transactions, subject to the condition that the said person complies with the provisions of Notification 14/2020 from 1st July 2021.
Amidst the confusion among taxpayers, CBIC has issued a circular (Circular no. 146/02/2021) clarifying the applicability and various difficulties which may be faced by the taxpayers in the implementation of the said notification. Hence, a taxpayer needs to be aware of the below-mentioned points for better compliance with the requirement to mention dynamic QR code on B2C invoices.
Issue-1. Is there any difference between the QR code issued for e-invoice and the dynamic QR code?
Yes, there is a difference. Dynamic QR code is issued by taxpayers for business-to-customer (B2C) transactions whereas QR code for e-invoice is issued by a taxpayer concerning business-to-business (B2B) transactions.
Issue-2. Which class of taxpayers are not required to mention dynamic QR code on B2C invoices?
The below-mentioned class of taxpayers is not required to mention dynamic QR code on B2C invoices:
i. Where the taxable service is supply by:
a) either a banking company or an insurer or a financial institution, including NBFC
b) an agency who transports goods and supplying services related to transportation of goods in a goods carriage by road.
c) a way of taking part in an exhibition of the cinematograph in films in multiplex screens
d) providing services through a way of taking part in an exhibition of the cinematograph in films on multiple screens
ii. OIDAR supplies made by any registered person
Issue- 3. Which details are needed to be a catch in the Dynamic QR Code?
Following are the details that should be contained by Dynamic QR Code: –
- 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 its breakup i.e. CGST, SGST, IGST, CESS, etc.
Further, a Dynamic QR Code should be like that can be scanned for making a digital payment.
Issue-4. In the case of exports, the overseas customer does not have a GSTIN number. Whether a Dynamic QR code has to be issued for export invoices?
No, a dynamic QR code is not needed to issue for export invoices because e-invoice is already issued for such transactions.
Issue-5. In case the customer wanted to pay without using Dynamic QR Code even after providing by the supplier, then, will the cross-reference of that payment be evaluated as compliance of Dynamic QR Code on the invoice, without using Dynamic QR Code for payment?
Yes, the said invoice will be considered to have complied Dynamic QR Code, if the supplier has provided an invoice of the payment having Dynamic QR Code.
Issue-6. In some cases, we see that retailer collects the payment before providing a tax invoice, like sharing the OTP in case of paying through a link or Paytm. Even, in this type of case, the retailer has to provide a Dynamic QR code?
In the aforementioned cases, there is no requirement to provide any tax invoice with a dynamic QR code as the payment is collected before the invoice is issued and cross-reference for the payment and invoice already exist. Although, if payment is made after providing an invoice, the Dynamic QR Code will be provided by the supplier on the invoice.
Issue-7. In case of cash on delivery by the e-commerce operators or supplies made through e-commerce operations, does the tax invoice issues should have the Dynamic QR code?
Yes, in the case of cash on delivery termed as COD basis, a Dynamic QR code must be issued and printed on the tax invoice.
In a nutshell, the Government has provided multiple postponements for the Dynamic QR code rollout, and currently, it is slated to be applicable w.e.f. 1st July 2021 but its application seems to be a bit difficult from the said date amidst these grim pandemic situations. The taxpayers should better equip themselves to be a step ahead in complying with these requirements whenever the government makes them applicable.
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CA Tarun Kapoor
AKGVG & Associates