10 Points About Dynamic QR Code in GST

Dynamic QR (Quick Reference) code is required to be shown on all Business to Customers Tax invoices issued by a registered taxable person whose turnover exceeds rupees five hundred crores during any of the last three financial years.

1. Is there any difference between the QR code issued for e-invoice and the dynamic QR code?

Yes, there is a difference. Dynamic QR code is issued by taxpayers having turnover above rupees five hundred crores during any of the last three years for business-to-customer transactions. QR code for e-invoice is issued for a taxpayer in relation to business-to-business transactions.

2. From when is dynamic QR Code is applicable?

Initially, a Dynamic QR code is required to be issued from 1^st of April 2020 wide notification number 72/2019 – Central Tax dated 13^th December 2019. It got postponed to 1^st of October 2020 wide notification number 14/2020 central tax, dated 21^st March 2020, due to the pandemic-like situation and business were not ready to implement the same technologically. The same got postponed to 1^st Dec 2020 wide notification number 71/2020 – central tax dated 1^st Dec 2020.

As part of providing relief to the taxpayers, notification number 89/2020 – central tax dated 29^th Dec 2020 issued waving of penalty under Section 125 of the CGST Act 2017 from 1^st December 2020 to 31^st march 2021 in case if the taxpayers’ issues tax invoices without dynamic, quick reference code for business-to-customer transactions.

From 1^st of April 2021, all taxpayers having aggregate turnover above rupees five hundred crores must issue dynamic, quick reference code for business to customer transactions.

3. Why did the Government introduce the Dynamic Quick Reference Code?

The Government has issued the dynamic, quick reference code to track the invoices and payments received against such invoices.

4. What should be shown in the dynamic QR code?

The dynamic QR code should show 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.

 The dynamic QR code generated should have the facility for the customer to make digital payment.

5. Dynamic QR codes should be generated for which documents?

Dynamic QR code has to be generated for only tax invoices only as per notification number 72/2019 – Central Tax dated 13^th December 2019.

6. In the case of exports, the overseas customer does not have a GSTIN number. Dynamic QR code has to be issued for export transactions?

No, a dynamic QR code is not required to be issued for the export invoices as e-invoice is being already issued for such transactions.

7. In multiple instances, we could see the suppliers or the retailers displays the QR code for enabling the payment by the customers. In such cases, also the Dynamic QR code has to be printed on the tax invoice?

As long as the supplier maintains the payment track, issuing tax invoices with dynamic QR codes for Business to customer transactions is not required.

The payment reference should be linked to the tax invoice/transaction id, date, time and amount of payment, mode of payment like UPI, Credit card, Debit card, online banking etc.

8. There are instances where the customers pay the retailers in cash; even in such cases, dynamic QR code has to be provided?

No, if the customer opts to pay the invoice in cash, it is not required in such cases, but the retailer has to maintain the cross-reference of the same.

9. In some instances, we come across where the retailer collects the payment before the issue of tax invoice, like sharing the OTP in case of Paytm or making payment through a link. Even in such cases, the retailer has to issue a Dynamic QR code?

In such cases, the retailer is not required to issue the tax invoice with a dynamic QR code as the payment is collected before the invoice is issued and cross-reference for the payment and invoice already exist.

10. In case of cash on delivery by the e-commerce operators or supplies made through e-commerce operations, does the tax invoice issues should have the Dynamic QR code?

In the case of supplies through e-commerce operators by e-commerce operators for cash on delivery termed as COD basis, a Dynamic QR code must be issued and printed on the tax invoice.

The Government has provided multiple postponements for the Dynamic QR code rollout, and now it is mandatory to be issued from 1^st April 2021. If the taxpayers do not follow the same, then the department officers can issue penalty under Section 122 and Section 125 of the CGST Act 2017. Going by the trend of issue of e-invoice where the threshold has been reduced from rupees five hundred crores as on 1^st Oct 2020 to rupees 50 crores from 1^st April 2021, the threshold for the issue of dynamic QR code can also be reduced going forward. Based on past experiences, the taxpayers should gear up for the same even though it is not applicable as on date.

Selection of Core Business Activity on GSTN Portal

GST has enabled a new feature on the GST portal. At the login time, the portal prompts the user to select the “Core Business Activity.” This is required for the department to understand the nature of the business carried out by the taxpayers.

The portal prompts three options initially

Manufacture – A manufacturer is a registered person who produces new products from raw materials and components using tools, equipment, and machines and then sells them to the consumers, wholesalers, distributors, retailers, or other manufacturers. A manufacturer may sell some more brought-out items or may provide some ancillary services with his manufactured goods. Still, he would continue to be classified as a manufacturer because it is the Primary Business Activity.

Trader – A trader is a registered person who engages in the buying and selling of goods. Traders have been further classified as –

• Wholesaler or Distributor
• Retailer

Retailer includes a registered person selling goods through e-commerce operators.

Service Provider & Others – A service provider is a registered person who provides service to a recipient and is neither a manufacturer nor a trader—Example Banking service, Information Technology service, works-contract service, agents, intermediaries, Goods Transport Agency etc.

The taxpayers must select only one of the Activity prompted.

The taxpayer should select one Activity which is providing him the major source of Revenue. Say, for example, if the taxpayer is having a manufacturing turnover of rupees one crore and forty lakhs and services of rupees twenty lakhs, in this case, the taxpayer has to select manufacturing as it is contributing maximum Revenue to him/her.

If the taxpayer is providing works contract services or others, then he/she can select the “Service Provider & Others.”

If the taxpayer is selecting “Trader,” then the system will prompt the taxpayer to select either of the following “Wholesaler/Distributor” or “Retailer.”

The options selected by the taxpayers can be modified at a later date by navigating through My Profile on the GST portal.