GST: Submission requesting for extension of implementation date of dynamic QR code for B2C supplies

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GST: Submission requesting for extension of implementation date of dynamic QR code for B2C supplies

Tejasvi

@tejasvi

June 15, 2021

Public Policy

As per Rule 46 of Central Goods and Services Tax Rules, 2017 (CGST Rules) read with Notification no 72/2019-Central Tax dated December 13, 2019, taxpayers having aggregate turnover exceeding INR 500 crores in a financial year, are required to mandatorily have a QR code on the invoice issued to an unregistered person (B2C invoice) w.e.f April 1, 2020.

Subsequently, vide Notification No. 89/2020–Central Tax dated November 28, 2020, it was provided that no penalty would be levied if taxpayers comply with the requirements of dynamic B2C QR code by March 31, 2021. Later on, the relaxation was extended till June 30, 2021 vide Notification No. 06/2021–Central Tax dated 30th March 2021.

Further, several clarifications including clarification regarding the contents of the dynamic B2C QR code were made available through Circular No 146/02/2021-GST dated February 23, 2021.

However, the Industry and the country at large have since then been grappling with a catastrophic second wave of the COVID-19 pandemic. Companies have been focusing on business continuity plans and ensuring safety of their employees, including arranging for vaccination drives and other welfare measures. Implementation of dynamic B2C QR code mechanism in such an environment has been extremely challenging, if not impossible. This is because the implementation requires significant tech effort into the existing tech platform of the companies. It is a time-consuming process requiring all stakeholders to be available through the change process.

Additionally, there are various practical challenges that have arisen during implementation of the dynamic B2C QR code. These issues include definition of unregistered persons, treatment of sales made through e-commerce platforms, treatment of cross reference of payment and part payment, amongst others. These issues/ clarifications need to be addressed so that the appropriate changes can be made in the system.

Further, there are many banks which are yet to become members of National Payments Corporation of India (NPCI) to provide Unified Payments Interface (UPI) mechanism. As a result, many Industry players are currently in talks with existing bankers to try and ensure that UPI payment mechanism is made available at the earliest, failing which alternative options will need to be explored.

Even after issuance of the necessary guidelines, modifications of tech systems would need ample time for an end-to-end implementation perspective.

As the intent of dynamic QR code is to promote digital payments, the implementation should not be rushed through, as for certain companies, this will have an all-India level impact with updates to all payment systems including for channel partners.
Also, many of the large companies have multiple payment solutions/ systems across the various branches/ verticals and implementation of processes will need to be the same.

Accordingly, NASSCOM has made a representation to GST Policy Wing and GSTN on June 11, 2021 requesting for further extension of relaxation of penalty waiver for not providing QR Code till September 30, 2021. Further, we have also requested Central Board of Indirect Taxes (CBIC) to issue detailed FAQs at the earliest, so that Industry can modify the systems accordingly and be ready to implement the dynamic B2C QR Code invoicing mechanism.

We hope you will find the update useful. We will keep you posted on further developments.

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Tejasvi