IRN, or Invoice Reference Number, is a unique number assigned by the government to identify every legal e-invoice created in India beginning in October 2020. In basic terms, when an invoice is sent to the Invoice Registration Portal (IRP), the government provides a unique number to that invoice using the hash algorithm under e-invoicing. A hash algorithm is a function that turns a message or string of characters (alphabets + numerals + certain special characters) into a series of numbers.
1. Every IRN is unique in the GST system, irrespective of the taxpayer, financial year and document type.
2. The invoicing system generates an invoice reference number after a taxpayer uploads their invoice details or has it done through a GSP (GST Suvidha Provider).
3. The IRN consists of a total of 64 characters. These are a combination of alphabets, numbers, and special characters. This unique number is used as a reference by any system to verify the authenticity of an invoice.
4. IRN is generated based on the combination of the suppliers GSTIN, document type, document number and year of invoice.
The supplier is required to prepare standard invoices using the ERP/accounting software. However, the supplier must verify that all mandatory e-invoice schema parameters, such as-
1. Document type code
2. Supplier's legal name, GSTIN, address, place, state code, PIN code
3. Document number and date
4. Preceding Invoice reference and date
5. Recipient's legal name, GSTIN, address, state code, place
6. Place of supply state code
7. Invoice Reference Number
8. Shipping to-State; PIN code and State Code
10. Supply type code
11. Item description
12. HNS code
13. Item price
14. Assessable value
15. GST rate
16. IGST value, CGST value and SGST value
17. Total invoice value.
It is necessary to upload the JSON file that was created at STEP 2 to the Invoice Registration Number (IRP). There are several methods available for uploading data, including offline tools, direct API integration, GST Suvidha Provider integration, and E-way bill API enabled taxpayer. IRP will carry out the following process following the submission of the JSON file.
1. Check the GST system for duplication. It will ensure that the same invoice from the same provider in the same financial year is not uploaded again.
2. IRP will create IRN upon confirmation. It will also digitally sign the JSON and add a QR code to it.
3. Send back the digitally signed JSON to the supplier.
4. IRP will share the uploaded invoice with GST as well as the e-way bill system.
Every taxpayer or business owner whose transactions fall under the e-invoice threshold must generate an e-invoice. Every e-invoice generated must include an IRN and a B2B QR code. The government made e-invoicing mandatory for companies with an annual turnover of Rs 500 crore or more beginning October 1, 2020. E-invoicing became mandatory for companies with an annual turnover of Rs 100 crore on January 1, 2021.
The e-invoicing mandate is applicable for taxpayers having aggregate turnover over Rs 50 crore. From the year 2022, e-invoice is mandatory for businesses with aggregate turnover exceeding Rs 10 crore.
Cancellation of an IRN is possible within 24 hours of its generation. After 24 hours, the supplier must either issue a debit/credit note or edit from GSTR-1, modifying the respective invoice details such as-
1. Cancellation of IRN is not possible in case the e-way bill is generated.
2. Once the invoice Registration Number is cancelled, the same invoice number cannot be re-used to generate another PIN.
3. Partial cancellation of IRN is not possible.
For a variety of reasons, small businesses should give their invoices unique numbers. They serve as essential management tools that enable us to keep track of multiple factors and maintain the profitability of our operation. We can track payments, eliminate duplicate payments, etc. using a unique number generated for each invoice. We can also make our record search simpler and more user-friendly by adding a simple unique reference number to the bill.