Notifications and Circulars related to B2C and QR Codes

IRN for B2C Invoices under GST

While B2B transactions i.e. invoices raised to a registered counterparty are explicitly covered under the current e-invoicing mandate as per GST Notification No.13/2020, it is equally important to understand the effect of e-invoicing under GST on various other business transactions like Exports, Deemed Exports, B2C, etc. 

A schema for e-invoicing was released via GST Notification 60/2020-Central Tax dated 30th July 2020 followed by the release of version 1.03 of E-invoicing API specifications. Even though the mandate covers only B2B transactions, the e-invoicing schema notified includes all Invoice Types like Exports, Deemed Exports, and B2C transactions as well.

Although the notification on e-invoicing schema has included B2C transactions as Invoice Type, as per e-invoicing mandate and actual API released, IRN generation is not applicable for B2C. Hence taxpayers should not send the B2C invoices to the Government (i.e. IRP). This has been further clarified by NIC that the requests sent with B2C invoices will be rejected by them and if sent multiple times, then the IRN generation can be also be blocked.

Thus for B2C invoices, IRN generation is not required.

Specifications for B2C QR Code

QR Code on B2C invoice is self-generated by the business and there are no standard specifications prescribed by the Government for this. The purpose of having a B2C QR Code is to facilitate digital payments and the RBI recommendations related to streamlining payments also need to be factored in while deciding the approach to define the QR Code for B2C transactions.

Dynamic QR Code and Static QR Code

A QR Code based on the content included in it can be either static or dynamic.

A dynamic QR code is editable, as opposed to a static QR code which cannot be edited. Dynamic QR codes allow for additional features like scan analytics, password protection, device-based redirection, and access management. Dynamic QR codes also result in a less dense QR code image that is more reliable to scan.

How to generate a QR Code?

Inferring the various notifications and clarifications issued for QR code on B2C transactions, the following is the gist:

• Enable Scan and Pay Currently many stores like D-Mart, Westside, etc have static QR codes at payment counters. The payee needs to scan the code, enter the amount and make payments. However, with dynamic QR codes, details like invoice amount, merchant’s id, merchant’s name, payment details, etc can be stored in the QR code itself. So, when the payee scans the QR Code, he/she will be able to directly make the payment through UPI.
• Adopt Interoperable QR Code

The RBI recommendation is to follow either of UPI or Bharat QR codes as these are inter-operable and standard QR codes. Businesses that have adopted proprietary QR Codes, will need to migrate to either of the standard codes by March 2022. Between the UPI and Bharat QR codes, the entity needs to decide about their approach. While UPI may be quick to implement, it may not support very high-value transactions. Bharat QR Code has the flexibility to include more content, however, the number of banks who have already implemented the option to issue QR Code is less than the banks that have UPI capabilities.

A brief comparative matrix is given below:

UPI based QR Code vs Bharat QR Code

Contents of a B2C QR Code

Dynamic QR Code, in terms of GST Notification No. 14/2020-Central Taxis required, to 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
• GST amount along with breakup i.e. CGST, SGST, IGST, CESS, etc.

Further, a dynamic QR Code should be such that it can be scanned to make a digital payment. IRIS is already live with the changes to include these fields in their B2C QR code.

Also, this QR code must be displayed on print and PDF invoices. The size of the printed signed QR code can be 2 X 2 inches. However, it depends on the available size on the invoice. But it should be readable from the QR code scanners.

In addition to the above point, there are four more points that are clarified in the circular. Here are the points:

1.Digitally Displayed Dynamic QR code

A dynamic QR code that the taxpayers are already making available to the recipient through a digital display, usually also includes a payment link.  Thus, on scanning the dynamic QR code, the recipient can directly make payments through such payment links. So, in case the taxpayers do not already have such a dynamic QR code, then the payment link can also be included in the self-generated QR code. If the taxpayers are already generating dynamic QR code with payment information and making it available to the recipient through a digital display, such dynamic QR code will be deemed to be QR code in accordance with the notification.

As per this latest circular, they additionally provided one more clarification around this digital displayed QR code. If the taxpayer is providing digitally displayed QR code then on invoice copy as they are not printing QR code hence they need to provide cross-reference of these payments so that invoice shall be deemed to comply with the requirement of Dynamic QR Code

2. Prepaid Invoices

If payment is done before generation of invoice then taxpayer shall provide cross reference of these payments on invoice copy then invoice shall be deemed to comply with the requirement of Dynamic QR Code.

In cases other than pre-paid supply where payment is made after invoice generation then, in that case, it is mandatory to print the dynamic QR code on the invoice copy

3. Electronic mode of payment

If the taxpayer makes available to customers an electronic mode of payment like UPI Collect, UPI Intent, or similar other modes of payment, through mobile applications or computer-based applications, where though Dynamic QR Code is not displayed, but the details of the merchant as well as the transactions are displayed then on invoice if taxpayers provide the cross-reference of these electronic payments then the invoice shall be deemed to comply with the requirement of Dynamic QR Code.

However, if payment is made after invoice generation then it is mandatory to print a dynamic QR code on the invoice copy.

4. Supply through E-commerce operator

As per the notification, it shall apply to each supplier/registered person separately, if such person is liable to issue invoices with Dynamic QR Code for B2C supplies as per the said notification. In case, the supplier is making supply through the e-commerce portal or application, and the said supplier gives cross-references of the payment received in respect of the said supply on the invoice, then such invoices would be deemed to have complied with the requirements of the Dynamic QR Code.

In cases other than pre-paid supply i.e. where payment is made after generation/issuance of the invoice, the supplier shall provide a Dynamic QR Code on the invoice.

Let’s understand it on basis of the flow chart:

B2C Dynamic QR code is not applicable for the below cases:

B2C QR Code is not applicable to:

1. Export Transactions – as covered under e-invoicing
2. Turnover below 500 Cr rupees in all financial years from 2017-18 onwards
3. Where the supplier of taxable service is:
4. An insurer or a banking company or a financial institution, including a non-banking financial company
5. A goods transport agency supplying services in relation to transportation of goods by road in a goods carriage
6. Supplying passenger transportation service
7. Supplying services by way of admission to an exhibition of cinematograph in films in multiplex screens
8. OIDAR supplies made by any registered person, who has obtained registration under section 14 of the IGST Act 2017, to an unregistered person.

Notifications and Clarifications around B2C QR Code