CBIC Clarification on Dynamic Quick Response (QR) Code

Clarification regarding applicability of Dynamic Quick Response (QR) Code on B2C invoices

Central Board of Indirect Taxes and Customs (CBIC), GST Policy Wing vide Circular no. 146/02/2021-GST and F. No. CBEC-20/16/38/2020-GST dated 23^rd February, 2021 has issued Clarification in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of notification 14/2020- Central Tax dated 21st March, 2020 - Reg.

 q  The Circular was issued to:

 §  The Principal Chief Commissioners /

§  Chief Commissioners /

§     Principal Commissioners /

§  Commissioners of Central Tax (All)

§  The Principal Directors General /

§  Directors General (All)

Notification No. 14/2020-Central Tax, dated 21^st March 2020 had been issued which requires Dynamic QR Code on B2C invoice issued by taxpayers having aggregate turnover more than 500 crore rupees, w.e.f. 01.12.2020. Further, vide Notification No. 89/2020- Central Tax, dated 29^th November 2020, penalty has been waived for non-compliance of the provisions of Notification No.14/2020 – Central Tax for the period from 01^st December, 2020 to 31^st March, 2021, subject to the condition that the said person complies with the provisions of the said Notification from 01^st April, 2021.

q Clarification given by Department

Sl.	Issues	Clarifications
1.	To which invoice is Notification No 14/2020- Central Tax dated 21st March, 2020 applicable? Would this requirement be applicable on invoices issued for supplies made for Exports?	This notification is applicable to a tax invoice issued to an unregistered person by a registered person (B2C invoice) whose annual aggregate turnover exceeds 500 Cr rupees in any of the financial years from 2017-18 onwards. However, the said notification is not applicable to an invoice issued in following cases: i). Where the supplier of taxable service is: a) an insurer or a banking company or a financial institution, including a non-banking financial company; b) a goods transport agency supplying services in relation to transportation of goods by road in a goods carriage; c) supplying passenger transportation service; d) supplying services by way of admission to exhibition of cinematograph in films in multiplex screens ii). OIDAR supplies made by any registered person, who has obtained registration under section 14 of the IGST Act 2017, to an unregistered person. As regards the supplies made for exports, though such supplies are made by a registered person to an unregistered person, however, as e-invoices are required to be issued in respect of supplies for exports, in terms of Notification no. 13/2020-Central Tax, dated 21st March, 2020 treating them as Business to Business (B2B) supplies, Notification no. 14/2020- Central Tax, dated 21st March, 2020 will not be applicable to them.
2.	What parameters/ details are required to be captured in the Quick Response (QR) Code?	Dynamic QR Code, in terms of Notification No. 14/2020-Central Tax, dated 21st March, 2020 is required, inter-alia, to contain the following information: - i. Supplier GSTIN number ii. Supplier UPI ID iii. Payee’s Bank A/C number and IFSC iv. Invoice number & invoice date, v. Total Invoice Value and vi. GST amount along with breakup i.e. CGST, SGST, IGST, CESS, etc. Further, Dynamic QR Code should be such that it can be scanned to make a digital payment.
3.	If a supplier provides/ displays Dynamic QR Code, but the customer opts to make payment without using Dynamic QR Code, then will the cross reference of such payment, made without use of Dynamic QR Code, on the invoice, be considered as compliance of Dynamic QR Code on the invoice?	If the supplier has issued invoice having Dynamic QR Code for payment, the said invoice shall be deemed to have complied with Dynamic QR Code requirements. In cases where the supplier, has digitally displayed the Dynamic QR Code and the customer pays for the invoice: - i). Using any mode like UPI, credit/ debit card or online banking or cash or combination of various modes of payment, with or without using Dynamic QR Code, and the supplier provides a cross reference of the payment (transaction id along with date, time and amount of payment, mode of payment like UPI, Credit card, Debit card, online banking etc.) on the invoice ; or ii). In cash, without using Dynamic QR Code and the supplier provides a cross reference of the amount paid in cash , along with date of such payment on the invoice; The said invoice shall be deemed to have complied with the requirement of having Dynamic QR Code.
4.	If the supplier makes available to customers an electronic mode of payment like UPI Collect, UPI Intent or similar other modes of payment, through mobile applications or computer based applications, where though Dynamic QR Code is not displayed, but the details of merchant as well as transaction are displayed/ captured otherwise, how can the requirement of Dynamic QR Code as per this notification be complied with?	In such cases, if the cross reference of the payment made using such electronic modes of payment is made on the invoice, the invoice shall be deemed to comply with the requirement of Dynamic QR Code.   However, if payment is made after generation / issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.
5.	Is generation/ printing of Dynamic QR Code on B2C invoices mandatory for pre -paid invoices i.e. where payment has been made before issuance of the invoice?	If cross reference of the payment received either through electronic mode or through cash or combination thereof is made on the invoice, then the invoice would be deemed to have complied with the requirement of Dynamic QR Code. In cases other than pre-paid supply i.e. where payment is made after generation / issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.
6.	Once the E-commerce operator (ECO) or the online application has complied with the Dynamic QR Code requirements, will the suppliers using such e-commerce portal or application for supplies still be required to comply with the requirement of Dynamic QR Code?	The provisions of the notification shall apply to each supplier/registered person separately, if such person is liable to issue invoices with Dynamic QR Code for B2C supplies as per the said notification. In case, the supplier is making supply through the Ecommerce portal or application, and the said supplier gives cross references of the payment received in respect of the said supply on the invoice, then such invoices would be deemed to have complied with the requirements of Dynamic QR Code. In cases other than pre-paid supply i.e. where payment is made after generation / issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.

 Disclaimer:

Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.

Departmental GST Audit Process – Key Highlights

 What is GST Audit?

Audit under GST is the process of examination of records, returns and other documents maintained by a taxable person. The purpose is to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess the compliance with the provisions of GST.

Ø  Key Objective:

1.      To ensure and promote the correctness of

·        turnover declared,

·        taxes paid,

·        refund claimed &

·        input tax credit availed, and 

2.      To assess the compliance of Registered Taxpayers (RTP) with the provisions of the GST Act and rules made thereunder.

 Ø Departmental GST Audit – Key Highlights

1.      Audit Officer (AO) will issue Prior Notice in Prescribed Form at least 15 days (or as may be prescribed) prior to the date of proposed visit seeking documents / information ranging from returns, books of accounts, agreements, invoices etc, and Details of tax payments and returns filed under other acts such as Income Tax, Professional Tax etc can also be demanded.

2.      Audit to be conducted at the place of business

3.      The registered person must provide a self-certified copy of the documents asked for by AO to concerned AO / Authority. (it may vary from case to case).

4.      In case on returns are not filed / incorrect, then the audit officer will quantify the correct liability and enforce recovery and can use the powers delegated to him by Commissioner

5.      AO can also verify the stock of goods.

6.      AO cannot carry out search of the premises

 Ø Points to be kept in mind:

1.      At least 15 days must be given for collection, compilation, preparation and arrangement of documents for audit from receipt of an audit notice

2.      Adjournment can be sought in case of unavoidable circumstances

3.      The registered person can submit his say throughout the audit proceedings in written form

4.      The opportunity of hearing must be provided

5.      Audit must be completed within prescribed time limit i.e. 3 months

6.      Findings of the Audit must be informed within 30 days of conclusion of audit in Form ADT-02

7.      In case any non-payment of tax is found out, such tax can be paid prior to issuance of Show Cause Notice along with interest. No penalty can be imposed in such cases.

Ø Preparedness of GST Audit includes

     ·        Making of internal reconciliation statements, 

·        Ensuring that all relevant documents are present in proper form; and 

·        Most importantly, taking a review of legal positions taken under GST. A few instances in this regard are as under:

·        the transactions on which GST has not been discharged (for instance, GST on transactions covered under Schedule – I of the CGST Act (i.e. supplies made without consideration) may not have been discharged); 

·        cases where incorrect/wrong input tax credit has been availed (for instance, Input tax credit on goods/services covered under Section 17(5) of the CGST Act has been inadvertently availed)

·        whether input tax credit, wherever required has been reversed and if reversed, whether quantum of reversal is correct (for instance reversals of input tax credits to the extent of making exempted supplies under Rule 42 and 43 of the CGST Rules)

·        cases where incorrect benefits under GST have been availed (for instance, claiming refund of IGST paid on exports which are covered under the provisions of Rule 96(10) of the CGST Rules).

·        An authorized representative of the said registered person (who is aware of all facts and legal positions) must be identified so as to represent before the GST Department at the time of Audit.

GST Audit has to be carried out with utmost seriousness and devote time with complete knowledge of the facts and laws including relevant updates.   

Disclaimer:

Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.

FAQs on QRMP scheme

Frequently asked questions on QRMP scheme

Q 1: What is QRMP scheme? What are its benefit?

A: Quarterly Return, Monthly Payment of Taxes (QRMP) Scheme is a scheme to simplify compliance for small taxpayers. Under this scheme, taxpayers having an aggregate turnover at PAN level up to Rs. 5 crore can opt for quarterly GSTR-1 and GSTR-3B filing. Payment can be made in the first two months by a simple challan in FORM GST PMT-06. For the ease of taxpayers, system has assigned quarterly frequency to small taxpayers automatically. 

Q 2: Why have I been assigned quarterly filing without opting for the same?

A: Taxpayers eligible for the simplified compliance scheme were assigned quarterly frequency by the GST system. All taxpayers were informed regarding the frequency assigned to them by e-mail and SMS.

Q 3: Why have I been assigned quarterly frequency by system even when my aggregate turnover on PAN is greater than Rs. 5 crore?

A: For the purpose of determining the eligibility for QRMP, the turnover was determined on the basis of the values declared by taxpayers in Table-3.1 of GSTR-3B (except inward supplies attracting reverse charge) for the Financial Year 2019-20. If a component of the turnover, like exempted or non-GST turnover, was not declared by a taxpayer in GSTR-3B or was declared in next financial year, then the turnover computed by the system for such taxpayers could be less than Rs. 5 crore. Such taxpayers may have been assigned to QRMP on the basis of values declared by them in GSTR-3B. Such taxpayers are advised to opt-out of scheme for quarter Apr-Jun’21 by 30^th April 2021.

Q 4: Why have I been assigned monthly frequency by system even when my aggregate turnover on PAN is upto Rs. 5 crore?

A: At the time of assigning the frequency by the system, system considered the aggregate turnover of the taxpayer and the filing status of FORM GSTR-3B for the month of October 2020. If the said GSTR- 3B was not filed till 30^th November 2020, the taxpayer were assigned to monthly frequency.

The system allows the taxpayer to opt for QRMP scheme only if the last applicable return in FORM GSTR-3B, whose due date is over, is filed

Illustration :

If the taxpayer is trying to opt for QRMP Scheme on 25^th Feb’21, from Quarter Apr-Jun’21 onwards then it will be allowed only if the return in form GSTR-3B is filed for the month Jan’21.

If the taxpayer is trying to opt for QRMP Scheme on 19^th Feb’21, from Quarter Apr-Jun’21 onwards then it will be allowed only if the return in form GSTR-3B is filed for the month Dec’20.

Q 5: I want to opt-out of QRMP scheme and become monthly filer. Why the portal is not allowing me to do same for the quarter Jan-Mar, 2021?

A: The last date to choose or change the filing frequency for the quarter of January to March 2021 was 31^st January, 2021. After 31^st January 2021, the filing frequency cannot be changed for the quarter January to March 2021.

However, for the quarter of April to June 2021, taxpayers may change their filing frequency from quarterly to monthly from 1^st February, 2021 to 30^th April, 2021.

It may be noted that profile selection is not a recurring requirement every quarter. Once a frequency has been opted for, it is applicable for all future periods unless changed further.

Q 6: What is IFF? Is it another compliance requirement?

A: Invoice Furnishing Facility (IFF) is an optional facility made available as per Rule-59(2) of the CGST Rules, 2017. This is provided for those quarterly taxpayers who want to pass on input tax credit (ITC) to their recipients (buyers/customers) in first two months of a quarter. Since IFF is an optional facility, it poses no additional compliance burden. It is a facility for those quarterly filers who intend to pass ITC to their recipients in first two months of the quarter. It may be noted that since IFF is an optional facility, IFF for a month will expire after the due date of 13^th of next month, and cannot be filed after this date.

Q 7: Is filing IFF mandatorily or optional?

A: Invoice Furnishing Facility (IFF) is an optional facility to those taxpayers who want to pass on input tax credit (ITC) to their recipients (buyers/customers) in first two months of a quarter. Those taxpayers who do not have to pass credit to their recipients need not file IFF in the first two months of the quarter. They may declare their outward supplies in the quarterly FORM GSTR-1. It may be noted that since IFF is an optional facility, IFF for a month will expire after the due date of 13^th of next month, and cannot be filed after this date.

Q 8: How do I make payment of my liability in first two months of the quarter?

A: In first two months of the quarter, payment of liability can be made by either of the following two methods:

a.       Fixed Sum Method: Portal will generate a pre-filled challan in Form GST PMT-06. The system generated pre-filled challan in this case is commonly also known as 35% challan.

b.      Self-Assessment Method: The actual tax due is to be paid through challan, in Form GST PMT-06, by considering the tax liability on inward and outward supplies and the input tax credit available for the period as per law.

The due date for making payment by challan is 25^th of the next month.

Q 9: What is fixed sum method of payment?

A: In fixed sum method, the taxpayer is required to pay a system generated challan in the first two months of a quarter. The system generated pre-filled challan in this case is commonly also known as 35% challan. If fixed sum method is opted for by the taxpayer & there is no ITC to be passed in that month, then except for paying system generated challan, no other compliance requirement is there in the first two months of the quarter.

Q 10: How is the 35% challan computed under the fixed sum method?

A: Under the fixed sum method, depending on the filing frequency in the previous quarter, the 35% challan is calculated by either of the following methods:

Method (a) :

An amount which is equivalent to the amount paid as tax from electronic cash ledger in their GSTR-3B return for the last month of the immediately preceding quarter, where the GSTR-3B return was furnished on monthly basis.

 

OR

 

Method (b) :

35% of amount paid as tax from electronic cash ledger in their return for the preceding quarter, where the GSTR-3B return was furnished on quarterly basis; or

It may be noted that since QRMP scheme is introduced in January 2021, all taxpayers were monthly filers in December 2020. Hence, the 35% challan will be populated as per method (a) for the quarter of January to March 2021 for quarterly filers.

Illustration:

Method (a) :

Taxpayer paid liability by cash amounting to Rs. 5500/- [IGST: Rs. 2,000/-, CGST: Rs. 1,000/-, SGST: Rs. 2,500/-] in monthly GSTR-3B for December 2020. The 35% challan generated as per the fixed sum method for January to March 2021 quarter will be of Rs. 5,500/- with the same head-wise break-up.

 

Method (b) :

Taxpayer paid liability by cash amounting to Rs. 7000/- [IGST: Rs. 1,000/-, CGST: Rs. 2,000/-, SGST: Rs. 4,000/-] in quarterly GSTR-3B for January to March 2021. The 35% challan generated as per the fixed sum method for April to June 2021 quarter will be of Rs. 2,450/- [IGST: Rs. 350/-, CGST: Rs. 700/-, SGST: Rs. 1,400/-].

 

Q 11: How do I declare B2C supplies in IFF for first two month of quarter if I have opted for QRMP?

A: Supplies made to unregistered persons (also called B2C supplies) are not required to be declared in IFF. These may be declared in FORM GSTR-1 for the quarter.

Q 12: How will I reconcile the values declared in IFF & GSTR-1 with quarterly GSTR-3B?

A: Taxpayers will be provided with a draft GSTR-3B, which will contain the details of the liability to be paid by taxpayers in the quarterly GSTR-3B. This will be prepared on the basis of the supplies declared in FORM GSTR-1 for the quarter. It will also contain data from the optional IFF, if any is filed in either of the first two months of the quarter. The said system computed values will also be auto- populated in quarterly GSTR-3B.

Q 13: How do I claim ITC for the first two months of the quarter?

A: In first two months of the quarter, no declaration pertaining to ITC is required to be made. The available ITC for the entire quarter will be made available by the system in quarterly FORM GSTR-2B. This quarterly facility will be in addition to the FORM GSTR-2B being made available on monthly basis, which can still be used for doing self-assessment.

Q 14: How do I again become a Monthly filer?

A: Filing frequency either monthly or quarterly can be selected as per timelines mentioned in below table.

Kindly navigate : Services > Returns > Opt-in for Quarterly Return

 

Effective Quarter (1)	Period during which filing frequency can be selected (2)	Last date for selecting the filing frequency (3)
January–February– March#	1st November to 31st January	31st January
April – May – June	1st February to 30th April	30th April
July – August – September	1st May to 31st July	31st July
October – November – December	1st August to 31st October	31st October

# For the quarter of January to March 2021, this option was available from 5^th December 2020 to 31^st January 2021.

For more details regarding the QRMP scheme, kindly refer the following Notifications & Circular:

·         Notification No. 82 /2020 – Central Tax dated 10^th Nov. 2021

·         Notification No. 85 /2020 – Central Tax dated 10^th Nov. 2021

·         Circular No. 143/13/2020 – GST dated 10^th Nov. 2021

• Click to watch the webinar on QRMP scheme in English, Hindi, Marathi, Tamil & Telugu. Click to watch the webinar on IFF & 35% challan in English & Hindi.
• Click to get more details and steps in FAQs & Manual. Click to read already issued advisory.

Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.