GST: CBIC defers levy of penalty by 4 months for not using QR codes

The Central Board of Indirect Taxes and Customs (CBIC) has deferred the levy of penalty for not using the dynamic quick response code (QR code) by four months for business-to-consumer transactions, reports ETV Bharat's Krishnanand Tripathi.

New Delhi: In a major relief to businesses during the ongoing Covid-19 global pandemic, the Central Board of Indirect Taxes and Customs (CBIC) has deferred the levy of penalty for not using the dynamic quick response code (QR code) by four months for business to consumer transactions.

In a notification issued on Sunday, the CBIC deferred the levy of penalty for not using QR codes for B2C transactions to April next year.

“On the recommendations of the Council, the government waives the amount of penalty payable by any registered person under section 125 of the CGST Act, 2017 for non-compliance of the provisions of notification No.14/2020–Central Tax between the period from the December 1, 2020 to March 31, 2021,” said the notification issued by the department of revenue.

The government, however, clarified that the penalty will not be levied if the said entities comply with the provisions of the said notification from April next year.

“The requirement to implement the QR codes has not been deferred. Entities those who are ready they will have to implement it,” a source told ETV Bharat.

He clarified that only the levy of penalty has been deferred to April next year in case an entity is facing difficulty in rolling out the facility from Tuesday.

Requirement to generate QR Codes

In December last year, the government made it mandatory for all the GST registered businesses having an annual turnover of over Rs 500 crore to generate a QR code for all the business-to-customer (B2C) transactions from April this year to encourage the digital payment in the country.

However, in view of the ongoing pandemic, its implementation was deferred to December 1 this year which was to come into effect from Tuesday (December 1).

The government has received representations from several stakeholders against the levy of penalty as companies have been facing difficulty in rolling out this facility.

Relief during the pandemic

Tax experts believe that deferment of the penalty by four months will be a big relief for those companies who were not in a position to roll out this facility from Tuesday.

“This will be a big relief for large taxpayers with turnover exceeding Rs 500 crores,” said Rajat Mohan, a senior partner at New Delhi based chartered accountancy firm AMRG Associates.

He, however, cautions that the compliance has not been deferred.

“Businesses need to understand that this compliance change is neither annulled nor deferred. Only penalty has been waived if the provisions of QR codes are complied from April 1, 2021,” Rajat Mohan told ETV Bharat.

Pune based Chartered Accountant Pritam Mahure says deferment of penalty for not issuing QR code based GST invoices is a welcome step as no other country is introducing a new compliance burden during Covid-19 pandemic.

“Typically, technology based changes are time consuming as they require taxpayers to carry out changes in their IT and ERP system,” Pritam Mahure said.

Pritam Mahure says globally the countries are not introducing new compliance under their tax system whereas India had proposed QR code based invoice at a short notice.

“Thus, it’s a welcome move on the part of GST Council to waive the applicable penalties,” Pritam Mahure told ETV Bharat.