Synopsis–The concept of UPI QR code is being followed by digital payment processors and is also available under the Income Tax Law.
It’s a known fact that the government has been pushing for a wide variety of digitisation and automation measures in the country. Keeping in line with the spirit of ‘Digital India’, the government has proposed and implemented various measures under GST to promote ease of compliance and thereby ease of doing business in the country, the most recent one being E-invoicing.
E-invoicing or ‘Electronic Invoicing’ is the latest development in GST introduced by the government to help keep track of every invoice raised by registered persons to a registered person under the GST Law. Under this system, the B2B invoices, debit notes and credit notes issued by the registered persons are required to be submitted online on the e-invoice portal, which in turn is authenticated electronically by the GSTN. The e-invoice system also digitally signs the e-invoice and generates a QR code for every document for easy access and validation of the document via hand-held devices.
A QR code or Quick Response code is a type of two-dimensional barcode, which was first designed in 1994 for the automotive industry in Japan. It is a machine-readable optical label that contains information about the item for which it is made.
With the phased implementation of e-invoicing for B2B transactions proceeding successfully, the government has shifted its focus to the B2C segment. For this, the government had issued Notification No. 14/2020-Central Tax, dated 21 March 2020, requiring Dynamic QR Code on B2C invoices issued by taxpayers having aggregate turnover more than Rs 500 crore, w.e.f. 1 December 2020. The purpose of this QR code was for making a payment by an unregistered person/consumer to such a registered person making the B2C supply, using UPI-based payment Apps by scanning the said QR Code.
This concept of UPI QR code is already being followed by digital payment processors and is also available under the Income Tax Law. However, due to various difficulties faced by the taxpayers in implementing this during the Covid-19 pandemic, the Central Board of Indirect Taxes & Customs (CBIC) had waived the penalty for not complying with this requirement until 31 March 2021. This gave rise to several queries and confusion among the taxpayers. To clarify the intent of the waiver and other related issues, CBIC has now issued a Circular (No. 146/02/2021-GST dated 23 February 2021), to address the concerns of the taxpayers regarding the QR code for B2C invoices. The clarifications provided by the circular are summarised below:
1. Applicability of the requirement for incorporating the QR Code:
The requirement to incorporate the QR code applies to taxpayers registered under GST whose annual aggregate turnover exceeds Rs 500 crore in any of the financial years from 2017-18 onwards, except the following types of taxpayers:
- An Insurer or a Banking company or a Financial Institution, including an NBFC
- A Goods Transport Agency (GTA) supplying services in relation to transportation of goods by road in a goods carriage
- Persons providing Passenger Transportation services
- Persons supplying services by way of admission to exhibition of cinematograph in films in multiplex screens
- OIDAR service registered under section 14 of IGST Act
- Persons making export supplies, in respect of such export supplies
2. Details to be captured in the QR Code:
- The QR Code must 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.
It must also be capable of being scanned to make a digital payment.
3. Payments without using the QR code
There could be instances where a customer opts to make a payment without using the Dynamic QR Code (in cash, or a combination of various modes of payment). In such cases, the invoice shall be deemed to have complied with the QR Code requirements. The supplier needs to provide a cross-reference of the payment on the invoice. The cross-reference should include:
- Transaction id along with the date
- Time and amount of payment
- Mode of payment like UPI, Credit card, Debit card, online banking etc. If the payment is made after the generation/issue of the invoice, the supplier shall provide the QR Code on the invoice. The circular provides clarity on certain other scenarios as well.
With the deadline for incorporating the Dynamic QR code for B2C invoices fast approaching, the trade and industry are gearing up to meet the statutory requirement and in turn, fulfil the government’s vision for a digital economy. The government for its part is also committed to providing the necessary assistance/clarifications to help the industry implement the same.
(The writer is Partner and Leader – Indirect Tax, BDO India)
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