E-invoicing is an electronic invoicing system under which GSTN electronically authenticates all B2B invoices. A unique number is issued for each invoice uploaded on the Invoice Registration Portal (IRP). The invoice information is transferred in real-time from the IRP to the GST portal and the e-way bill portal. Although e-invoicing applies only to B2B invoices, the law requires certain entities to generate and print a dynamic QR code for B2C invoices.
1. E-invoicing and B2C transactions
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). As of now, B2C invoices are exempt from e-invoicing. However, a taxpayer is required to generate a dynamic QR code for enabling digital payments on all B2C invoices as per Notification No. 14/2020-Central Tax, as amended by Notification No. 71/2020-Central Tax.
The notifications have directed all taxpayers with an annual turnover of more than Rs.500 crore in any preceding financial year (starting from 2017-18) are compulsorily required to generate 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, the CGST Notification no. 89/2020 dated 29th November 2020 waived the penalty leviable on non-compliance of this requirement from 1st December 2020 up to 31st March 2021. Any failure to comply from 1st April 2021 shall attract penalty of Rs.25,000 leviable for incorrect invoicing under Section 125 of the CGST Act.
2. QR code for B2C invoices
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. For B2C invoices, IRN generation is not required. If a B2C invoice is sent to IRP, it will be automatically rejected, and if sent multiple times, then the IRN generation for that taxpayer can be blocked. Thus, the main motto of generating QR codes for B2C e-invoices is to promote digitalisation of payments using any UPI.
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. It provides a less dense QR code image, which is more reliable to scan.
3. Who need not generate dynamic QR code on B2C invoices?
Exempted suppliers include – insurance company, a banking company or financial institution, a non-banking financial company, a goods transport agency, passenger tickets by transport business, movie tickets by multiplex screens, and non-residents making Online Information Database Access and Retrieval services.
Export of goods or services to unregistered persons do not require dynamic QR code as these are considered as B2B transactions and e-Invoicing shall apply.
4. How to generate the QR code for B2C invoices and its contents?
Under B2B invoices, QR codes are generated by the IRP and not the taxpayer. However, under B2C invoices, a taxpayer can generate QR code using their own QR code generating machines and algorithms.
A regular B2B QR code must contain the following details:
- GSTIN of the supplier
- Supplier UPI ID
- Invoice number, given by the supplier
- Date of the generation of invoice
- Bank account details of the payee and IFSC
- CGST, SGST, IGST, Cess, if any
The scanning of the dynamic QR code should allow the digital payment by the customer.
Same details are required for B2C QR codes as well, except:
- GSTIN of the recipient – As the recipient is an unregistered person, instead of mentioning his GSTIN, a taxpayer can mention his name.
- A taxpayer must include a payment reference link so that the recipient is redirected to the payment reference link.
Implementation of QR code on B2C invoices will enable the government to get hold over B2C transactions. Also, it promotes the digitalisation of payments. One can make payments using UPI in a single go. One need not enter the amount, enter the UPI PIN/password and the payment will be made as per the amount mentioned on the e-invoice.
5. How does B2C GST invoice look like or format with dynamic QR code?
The formats of a B2C invoice containing the dynamic QR code is given below:
6. What does GST Circular 146/02/2021 dated 23rd February clarify?
If a Dynamic QR Code has been provided, but the customer opts to make a payment without using it. Will this situation be treated as compliance with the Dynamic QR Code requirements?
Yes. If a supplier has issued an invoice containing a Dynamic QR Code, the invoice will be deemed to have complied with the Dynamic QR Code requirements.
In the following cases, if the supplier has digitally displayed the Dynamic QR Code, the requirement will be said to be complied with, if-
- The customer pays through credit/debit card or through UPI, and the supplier provides a cross-reference of these payment details on the invoice, such as the transaction ID, date, time, amount, and mode of payment.
- The customer pays with cash, and the supplier provides a cross-reference of the date and amount details on the invoice.
Suppose a supplier provides digital modes of collecting payments, such as UPI Collect, UPI Intent, etc. through a mobile or computer-based application, where the Dynamic QR Code is not displayed but only the details of the merchant and the transaction details are displayed. Will this situation be treated as compliance with the Dynamic QR Code requirements?
As long as a cross-reference can be provided on the invoice about the payment made using such electronic modes of payment, the invoice will be deemed to have complied with the Dynamic QR Code requirements. But if payment is made later on after issuing the invoice, then the dynamic QR code must be displayed on it.
If the payment for an invoice has been made before the invoice has been issued, then is the generation of printing of the Dynamic QR Code on the invoice mandatory?
No, generation/printing of the Dynamic QR Code is not required in cases where payment is made before the issuance of the invoice. However, a cross-reference needs to be provided on the invoice, of the payment made through cash/electronic mode or a combination of both. Having satisfied these conditions, the invoice will be deemed to be compliant with Dynamic QR Code requirements. On the other hand, if payment is made later on after issuing the invoice, then the dynamic QR code must be displayed on it.
Will suppliers selling through e-commerce operators or other online applications be required to comply with Dynamic QR Code requirements, if the e-commerce operator/application has already complied with the same?
The Dynamic QR Code requirements will apply to each supplier individually. Hence, if a supplier is able to provide a cross-reference of the payment received with regard to an invoice, on the said invoice, then the invoice will be deemed to be compliant with Dynamic QR Code requirements. But if payment is made later on such as COD after issuing the invoice, then the dynamic QR code must be displayed on it.