August 24, 2023

e-Invoicing for B2C transactions


E-invoicing is a digital system where GSTN (Goods and Services Tax Network) verifies business-to-business (B2B) invoices electronically. Each B2B invoice gets a unique number and QR code on the Invoice Registration Portal (IRP), and this information is sent to the GST and e-way bill portals in real time. While e-invoicing is for B2B, specific entities create invoices and payment QR codes for business-to-consumer (B2C) invoices.

What are B2B and B2C in e-Invoicing

B2B (business-to-business) is a form of transaction between two businesses. 

If the customer you are creating the invoice for is a GST registered customer or entity and will be claiming input tax credit (ITC) then that transaction is considered as a B2B transaction. 

Whereas B2C (business-to-consumer) transactions are between businesses and customers. 

where the end-user is not registered with the GST portal and will not be claiming input tax credit (ITC). 

Is e-Invoicing mandatory for B2B transactions

Yes, according to the CBIC notification on the sixth phase of e-invoicing. Taxpayers with INR 5 crore or more in turnover in any financial year from 2017-18 must issue e-invoices. 

Can e-Invoices be generated for B2C transactions

Firstly, e-Invoices cannot be created for B2C transactions because these transactions are sales to regular consumers for which no tax credit is claimed, but few businesses create invoices with dynamic QR codes for B2C transactions to collect payments digitally. 

QR code for B2B and B2C e-Invoices

Generally, A QR code is a quick response code that contains coded information about an e-invoice. It is a two-dimensional version of a barcode and can be scanned from any mobile device. 

In B2B transaction e-invoices, this QR code is generated by the IRN portal, and when scanned by any mobile device, it provides real time data on the e-Invoice and can be used to track the specific transaction by tax authorities and the government. 

But in the case of B2C transactions, no QR code is generated by the IRN portal. These QR codes are self generated by the taxpayers. Which can be used only for payment purposes. If a B2C invoice is sent to IRP, it will be automatically rejected, and if sent multiple times, then the IRN generation for the taxpayer can be blocked. 


E-Invoicing FAQs (Frequently Asked Questions)

Avoid e-Invoicing scams by checking vendor compliance

GST E-invoicing, Data Analytics, Artificial Intelligence, and E-Waybill