Rule 46 of Central Goods and Services Tax Rules, 2017 (CGST Rules), vide sixth proviso, empowers the Government to notify requirement of Quick Response (QR) code on the invoice.
Further, Notification no 72/2019-Central Tax dated December 13 2019 was issued by Central Board of Indirect Taxes and Customs (CBIC) which required a registered person with aggregate turnover exceeding INR 500 crores in a financial year, to mandatorily have a QR code on the invoice issued to an unregistered person (B2C invoice). Vide Notification 14/2020-Central Tax dated March 21, 2020 and Notification No 71/2020-Central Tax dated September 30, 2020, the above notification was superseded and date for issuance of QR Code on B2C invoice was deferred to October 1, 2020 and December 1, 2020 respectively.
On February 23, 2021, CBIC issued Circular no 146/02/2021-GST clarifying that dynamic QR Code should 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.
While these much-awaited clarifications are welcomed by the industry, there are still various aspects in relation to generation of QR code which require further clarification. These include clarity on definition of “unregistered persons”, treatment of sales made through e-commerce platforms or online applications, whether banks and other RBI approved payment service providers will be making available this solution to registered persons or will the QR code be self-generated (by the respective registered persons), amongst others.
Drawing a parallel from e-invoicing which was implemented from October 1, 2020, there was a formal outreach conducted with stakeholders and clear guidelines were made available on the manner of generation of e-invoice, data points required to generate e-invoice as well as on Invoice Reference Number (IRN) generation.
However, the aforementioned Circular clarifies constituents of QR code without providing much clarity on its generation. QR Code is a business reform and not just a tax law change. It will involve significant changes to be made to ERP systems/ Point of Sales/ Cash Register System/ connected payment solution systems, which will require time for end-to-end implementation.
For a smooth and successful implementation of a critical business change of this magnitude, it is imperative that taxpayers are given adequate time to configure and test their IT systems from a date post where there is complete clarity regarding the process flow.
In this regard, we have made a detailed representation to GST Policy Wing requesting them to issue appropriate clarifications to the issues so that Industry can work towards smooth implementation of QR code requirement. Further, we have also request that a time frame of six months be given to businesses to enable them to plan and effect changes for smooth implementation of QR code requirements. For this, we have requested for extension in timelines for waiver of penalty up to 30 September 2021 (i.e. additional six months) by way of amendment in notification no 89/2020-Central Tax, dated November 29, 2020.
We will keep you posted on further developments in this regard.
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