Compliance With QR Code Along With E-Invoicing

Although e-invoicing applies to B2B invoices, the GST law requires certain entities to generate and print QR code for B2C invoices

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E-invoicing is an electronic invoicing system under which a designated portal of the government electronically authenticates all B2B invoices. A unique invoice reference number (IRN) is issued for each invoice uploaded on the Invoice Registration Portal (IRP). The information contained in the invoice is transferred in real-time from the IRP to the GST portal and the e-way bill portal. Although e-invoicing applies to B2B invoices, the GST law requires certain entities to generate and print QR code for B2C invoices.

Wilfried Pohnke from Pixabay

The Central Board of Indirect Taxes & Customs (CBIC) made e-invoicing compulsory from 1 October 2020 for taxpayers having an aggregate turnover of more than INR 500 crore in the previous financial year. All those taxpayers will be required to issue e-invoices in respect of B2B tax invoices, credit notes and debit notes. The e-invoicing system also requires invoices printed to have a space for QR codes. Even in the case of exports and RCM supplies, since tax invoices are required to be issued, the QR code shall also be applicable.

The CBIC issued a notification which states that all businesses with a turnover greater than INR 500 crore are required to generate dynamic QR code for all B2C transactions from 1 December 2020. Note that the supplies made to unregistered persons or consumers are referred to as B2C transactions, and the end-user will not be able to claim input tax credit (ITC).

It is very important to note that one should mandatorily print QR code on the invoice. Non-printing of QR code would lead to non-compliance and the invoice will be considered as an invalid invoice. In other words, it is regarded as a non-issue of invoice and thus attracts the penalties at each instance as follows:

  • Penalty for non-issuance of invoice: 100 per cent of the tax due or INR 10,000, whichever is higher.
  • Penalty for incorrect invoicing: INR 25,000

However, the CBIC has waived the penalty for non-compliance with dynamic QR code provisions for B2C invoices generated till 31 March 2021. The business should mandatorily comply with the dynamic QR code provisions from 1 April 2021 to avoid this penalty.

A QR code contains coded information about an e-invoice and is a two-dimensional version of a barcode and can be scanned from any mobile device. The dynamic QR code is an editable one and allows additional features such as password protection, scan analytics, device-based redirection and access management. Also, it provides a less dense QR code image, which can be reliably scanned.

The National Informatics Center (NIC) had released a note to clarify all the queries received on the QR Code. The note clarified that the QR code for B2B invoices would be generated by IRP while generating IRN. However, the taxpayers have to generate dynamic QR code for B2C invoices using their own QR code generating machines and algorithms.

The NIC clarified that IRN is not required to be generated for B2C invoices. If a B2C invoice is sent to IRP, it will automatically reject the same, and if sent multiple times, then the IRN generation can be blocked for that taxpayer.

A regular B2B QR code should contain the following details:

  • GSTIN of the supplier
  • GSTIN of the recipient
  • Date of the generation of invoice
  • Invoice number (given by the supplier)
  • Invoice value
  • The number of line items
  • HSN Code of the main item
  • Unique Invoice Reference Number/Hash

Same details are required for B2C dynamic QR code 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.
  • The supplier should include a payment reference link so that the recipient is redirected to the payment reference link.

The purpose of QR code on B2B invoice is to embed key particulars of reported invoice and to verify whether an invoice has been actually reported to IRP or not and whether the digital signature is intact or not. In contrast, the main purpose of generating dynamic QR codes for B2C e-invoices is to get a hold on B2C transactions and to promote digitization of payments using any UPI.