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Contributed on November 20, 2020

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GST: Submission requesting for clarification on applicability and contents of B2C dynamic Quick Response (QR) code

Blog: NASSCOM Official Blog

Background

Sixth proviso to Rule 46 of Central Goods and Services Tax Rules, 2017 (CGST Rules) empowers the Government to notify requirement of a QR code on the invoice. Further, Notification no 72/2019-Central Tax dated 13 December 2019 was issued which required an invoice issued by a registered person whose aggregate turnover in a financial year exceeds INR 500 crore, to an unregistered person (B2C invoice) to have QR code, from April 01, 2020. This requirement has been further deferred vide Notification No 71/2020-Central Tax, dated 30 September 2020 till December 1, 2020.

However, it is still unclear as to the intent behind introduction of this requirement and what would be the contents of the dynamic QR.

To take reference from Income Tax Act, 1961 (IT Act), S.269SU inserted vide Finance Act, 2019 requires every person carrying on business and having sales/ turnover/ gross receipts from business exceeding INR 50 crore to mandatorily provide facilities for accepting payments through prescribed electronic modes. Subsequently, the following modes were notified as prescribed electronic modes:
a) Debit Card powered by RuPay;
b) Unified Payments Interface (UPI) (BHIM-UPI); and
c) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM UPI QR Code)

Further, in order to address hardship caused to B2B transactions wherein transactions are undertaken through electronic modes, Central Board of Direct Taxes (CBDT) issued a clarification vide Circular No. 12/2020 dated May 20, 2020 whereby provisions of S. 269SU shall not be applicable to a specified person having only B2B transactions (i.e. no transaction with retail customer/ consumer) if at least 95% of aggregate of all amounts received during the previous year, including amount received for sales, turnover or gross receipts, are by any mode other than cash.

Based on reading of FAQs issued by GSTN, it appears that the whole purpose of bringing in QR code on B2C supplies is to promote e-payments in line with the provisions under the Income Tax Act, 1961.

Recommendations:

Based on the above, we have made a representation to GST Council and GST Policy Wing to consider the following suggestions:

a) Deferment of applicability of dynamic QR Code for B2C invoices to March 1, 2020 –  The industry is awaiting clarifications on content as well as operational aspects regarding dynamic QR code for B2C invoices. Even after issuance of necessary guidelines, modifications to ERPs/ billing/ PoS systems would need ample time from end-to-end implementation perspective. Thus, we have requested that the date of implementation of dynamic QR Code on B2C invoices should be deferred from 01 December 2020 to 01 March 2021.

b) Clarity on contents of the dynamic QR code – It would be useful to get detailed clarification on the contents of dynamic QR code for effective implementation. We also requested that the following aspects should be considered while issuing the clarification:

• Such dynamic QR code when shown on digital display to promote UPI based payment, would be sufficient compliance of the requirement.
• The taxpayer can provide its payment processor’s bank details in order to comply with the requirement of capturing dynamic QR code to be printed on taxpayers B2C invoice, i.e., the payment may be collected by the payment processor and not necessarily by the supplier.

c) Clarification on applicability of dynamic QR code – Clarification is required on the requirement of printing dynamic QR code in cases where goods are purchased over a mobile application and the order is prepaid.

d) Seller who is already in compliance with the requirement including the online sellers should be exempted from this requirement –  Online e-commerce platforms/ sellers already allow payment through electronic modes including debit/ credit cards, net-banking, payment wallets etc. Thus, requiring a dynamic payment QR code to enable electronic payments is a duplication of effort and would be unfruitful and hence should be exempted. Hence, this requirement should be relaxed.

We hope you will find this useful. We will keep you posted on further developments in this regard.

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