How GST Compliant Dynamic QR Codes Affect Your Business?

How GST Compliant Dynamic QR Codes Affect Your Business?

24 February, 2023

The Government of India has steadily promoted the use of cashless transactions under its Digital India campaign. The latest in a slew of reforms and measures aligning with this mission is that of GST compliant dynamic QR codes for consumers. These GST compliant QR codes will be another step in empowering India digitally and reducing the dependency on cash.

What is a dynamic QR code?

While static QR codes have gained mainstream popularity, they are distinct from dynamic QR codes. A static QR code is non-editable and customer needs to enter amount after scanning a static QR. Dynamic QR codes can be used to accept various amounts from different customers as they are customized for each invoice.

As far as B2C (Business to Customer) invoicing is concerned, a dynamic QR code contains details about the e-invoices. A merchant can create a unique dynamic QR code for every invoice, and it will expire as soon as the payment is received.

GST compliant dynamic QR codes have been introduced and linked to B2C invoices to encourage digital payments via UPI apps.

What is the latest government mandate regarding dynamic QR codes for B2C transactions?

Although generally, e-invoicing has been limited to B2B transactions, new government instructions have extended its use to the B2C sector. B2C invoices refer to those that are sent to unregistered consumers. Thus, the end-user cannot claim Input Tax Credit (ITC). Suppose you are a business owner who accepts payments digitally. In that case, you must know about the latest notification issued by the Central Board of Indirect Taxes and Customs (CBIC), Ministry of Finance.

The Notification No. 14/2020– Central Tax dated 21 March, 2020 has a direct impact on your business. It states that all taxpayers who generate an annual turnover of more than INR 500 crore in any financial year (from 2017-2018) have to include a dynamic QR code on B2C invoices and enable digital payments.

Earlier, if you failed to comply with this mandate from October 1st 2021, you could attract a penalty of INR 25,000 as per Section 125 of the CGST Act that deals with incorrect invoicing.

How to make a dynamic QR code GST compliant?

A Dynamic QR Code must contain the following information to comply with the current GST rules and regulations:

  • B2C Supplier UPI ID.

  • Supplier GSTIN Number.

  • Invoice date and number.

  • The total value of the invoice.

  • Payee’s bank account number along with IFSC.

  • GST amount with a definite breakup of CGST, SGST, IGST, Cess, etc.

You will only have to comply with the notification mentioned above if you issue a tax invoice (B2C invoice) to an unregistered person and meet the turnover criteria.

Who all are exempt from creating dynamic QR codes for B2C invoices?

The list of exempted suppliers consists of insurance companies, banking companies, financial institutions, non-banking financial companies, multiplex movie tickets, passenger tickets issued by transport businesses, goods transport agencies, and non-residents making Online Information Database Access and Retrieval services.

Now that you are more aware of the role of dynamic QR codes in B2C transactions make sure that you comply with the government notification if it applies to your business. Appropriate invoicing using dynamic QR codes will also come in handy when undertaking your income tax filings. Once your business’ taxes have been filed as per the law, it becomes easier to approach a bank or financial institution to procure financial aid. To that end, you can count on the products and services offered by HDFC Bank, from loans for MSMEs to overdraft and credit facilities for business financing needs. HDFC Bank can help you turn your business dreams into a reality.

Continue reading more about Everything You Need To Know About Financial Reporting here.

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