Invoice Reference Number or IRN as it is usually called is a registration number provided by the government under the e-invoicing mandate to prove the authenticity of any invoice generated by the businesses. The e-invoicing mandate which was introduced in India in October 2020 mandates businesses to get their invoices registered with the Government designated system i.e. Invoice Registration Portal (IRP). The applicability of e-invoicing presently is for companies with a turnover of Rs. 50 cr. and above. Not all documents or all transactions are covered under e-invoicing. The current scope includes invoices, debit notes and credit notes issued to other registered parties i.e. B2B transactions and also export invoices.
What is IRN?
IRN stands for Invoice Reference Number. It is one of the main components of an e-invoice. To explain in simple terms, when an invoice is sent to the Invoice Registration Portal (IRP), the government assigns a number unique for that particular invoice using the hash algorithm under e-invoicing. Hash algorithm is nothing but a function that converts a message or a string consisting of characters i.e. alphabets + numbers + certain special characters into a series of numbers.
What are the components of an IRN?
Let us understand the characteristics of Invoice Reference Number (IRN):
- The IRN has 64 characters in all. These characters are a mix of alphabets, numbers and special characters. Any system verifies the authenticity of an invoice by using this unique number as reference.
- Every IRN is unique in the GST system, irrespective of the taxpayer, financial year and the document type.
- IRN is generated by the e-invoice system after a business/ taxpayer uploads their invoice details or gets it done via a GSP
- IRN is generated based on the combination of the supplier’s GSTIN, document type (invoice, debit note or credit note), document number and year of the invoice (Financial Year)
What are the parameters used to generate IRN
The government uses the ‘hash algorithm’ to generate the invoice reference number. There are few parameters used to generate IRN, they are:
- The GSTIN of the supplier
- The document type: The document type can be an invoice, a debit note or a credit note
- The document number: A document number is an invoice number which is printed on the document that is being issued to the purchaser. There are certain rules that taxpayers should be aware of while creating the document number in their ERPs or manually. This will help to avoid rejection of IRN generation.
- Document Number should be of maximum of 16 characters/
- It should comprise of either/or of the following: alphabets, numbersandeither or of these two special characters – slash‘/’ and hyphen‘‘.
- The document number should not start with 0, / and -.
- The financial year: The FY is calculated based on the date of invoice and is represented as YYYY-YY. For example, if the date is 3rd January 2020, the financial year is 2019-20.
Who needs to generate IRN under e-invoicing?
Every taxpayer or business owner who comes under the e-invoice threshold must generate an e-invoice for their transactions. Every e-invoice generated needs to have IRN and B2B QR Code on it. From 1st October 2020 onwards, the government made e-invoicing mandatory for companies with annual turnover of Rs. 500 Cr and above as per GST Notification 70/2020and for companies with annual turnover of Rs. 100 Cr. and above e-invoicing was made mandatory from 1st January 2021 onwards as per GST Notification 88/2020. Now, as per the latest notification i.e. GST Notification 05/2021 , the e-invoicing mandate is applicable for taxpayers having aggregate turnover above Rs. 50 Cr. from 1st Apr 2021 onwards. Hence, any company with annual turnover of Rs. 50 CR and above needs to generate IRN.
Why is IRN necessary?
If the business comes under the e-invoicing threshold and yet it does not generate an e-invoice i.e. the invoice does not have the official invoice reference number from the IRP then the invoice is to be considered invalid. The non-issuance of IRN despite being under the threshold to also attract penalties.
Cancellation of Invoice Reference Number (IRN)
Cancellation of IRN is possible for the invoice which is already uploaded/ reported to the Invoice Registration Portal (IRP) and for which IRN is generated. This has to be done within 24 hours of its generation. Some of the basic reasons for the cancellation of IRN by the supplier can be-
• Cancellation of order by the buyer, or
• Mistakes in e-invoice, or
• Incorrect/ wrong entry in e-invoice, or
• Duplicate entry.
Some of the important rules relating to the cancellation of IRN are hereunder-
• Cancellation of IRN is possible only within 24 hours of the generation of the IRN. Post completion of 24 hours, the
supplier will have to issue either a debit note/ credit note or edit Form GSTR-1 modifying the respective invoice
• Cancellation of IRN is not possible in case the e-way bill is already generated/ active for the respective IRN.
• Once the e-invoice (IRN) is cancelled, the same invoice number cannot be re-used to generate another IRN.
• Partial cancellation of e-invoice (i.e., IRN) is not possible.
How to generate an IRN?
Government has provided three different options to businesses to generate IRN. They can choose the one suitable to them depending on various factors such as number of invoices they have to process per day, how sound their internal technical team is, ERP in use, complexity of business processes etc. Below is a list of ways how businesses can generate IRN:
1. Generate IRN with Excel Utility Tool: Excel utility tool is suitable for companies with lesser number of invoices to process, with simpler business hierarch, small teams and where they do not have a high-end technical team in place.
2. Generate IRN through API integration via E-invoice Portal: Government has also provided APIs for IRN Generation. Companies with bulk processing and a sound technical team can opt for this method. The technical teams need to design the integration and manage the entire integration on their own. While this DIY model may seem cost-effective initially, but with constant changes in the system, revisions in requirements, stability issues etc, it may become heavy on the pockets in the long run.
3. Generate IRN through GST Suvidha Provider (GSP) like IRIS GST: Government has also exposed the APIs for IRN Generation to the GST Suvidha Providers or GSPs. The GSPs are connecting link between the government and the taxpayer who design efficient and cost-effective platforms to assist taxpayers in meeting GST mandate.
IRISGST is one of the GSPs and has an e-invoicing platform-IRIS Onyx that lets users easily integrate their systems with the e-invoice portal and generate IRN seamlessly. The companies need to have little to no technical knowledge and can perform bulk operations with little efforts.
Generating IRN via IRIS Onyx
IRIS Onyx is an automated, integrated and seamless e-invoicing solution! IRIS Onyx is a cloud-based solution that can integrate with your billing systems seamlessly in multiple ways and generate IRN with zero disruption to your business. It is a one-stop platform to view, share and collaborate with your customers and suppliers alike, while managing the entire communication with the GST systems in a hassle-free manner.
There are multiple options to generate IRN via IRIS Onyx. You can use APIs, Bulk upload facility or you can even go with SFTP or manual upload of invoices.
Even if you have different billing and accounting systems in separate offices; have different volumes and frequencies of invoice generation; old legacy ERPs which are difficult to integrate; lack of internal IT skill sets to quickly adopt or long change management process, IRIS Onyx can help.
IRIS Onyx has a data integration option as per your needs and it understands data woes. Onyx has multiple options for data integration:
- Data APIs: Onyx offers pass through APIs as well as enhanced APIs. Choose to send CSV file containing one or multiple invoices through pass through APIs and get the IRN generated. Send data for one invoice at a time (in JSON format) to IRIS and get a real-time response.
- Push file to SFTP: Multiple teams working round the clock and no real-time data to upload? You can assemble the entire data at one place and push files at scheduled intervals through SFTP and get IRN either through the portal or file response
- Upload file APIs: Want to upload files as per your convenience? You can use Upload file APIs and send invoices belonging to multiple GSTINs in the CSV format and get IRN in no time.
- Manual upload: Onyx offers users to bulk upload their invoice data in CSV file and generate IRN. Upload can be done at any level – PAN, GSTIN, Division/Branch/Plant/Location (within GSTIN). The platform validates the file for basic validation errors like document number format etc and helps to seamlessly connect with the e-invoice portal and bulk generate the IRN for entire data.
FAQs for Invoice Reference Number or IRN
Can a taxpayer generate IRN and send the same to IRP for verification?
No. While the logic for generating IRN has been published by the Government, IRN is not expected to be sent by the taxpayer to Government. Only on successful verification of invoice details, IRP will be generating IRN which the taxpayers will need to use on their invoice. Full details and logic are available at https://einv-apisandbox.nic.in/irn.html
How long does the IRP store the invoice data?
The IRP (Invoice Registration Portal) stores data for 2 days only.
If any corrections are needed in the document for which IRN is generated, what is the procedure?
Once an IRN is generated, the data cannot be changed. However, taxpayer can cancel the IRN generated within 24 hours of generation and then re-generate IRN with the updated invoice details. While the invoices could be available on GST portal for making changes if any before ling the return, it is recommended to carry out changes using debit or a credit note. This will ensure consistency in data.
How will I, as a purchaser, know that the vendor is covered under e-invoicing mandate and that the invoice should include valid IRN?
As of now there is neither API nor any information directly available in public domain which can help to ascertain whether a vendor is into e-invoicing bracket or not, however is expected in future. For now, a feature on IRP portal is available to check if the taxpayer is enabled for e-invoice.NIC has provided a list of such taxpayers who are generating E-Invoices. On the basis of this list IRIS Peridot helps users to identify whether the taxpayer is covered under E-invoicing.
Is IRN required for purchases from unregistered parties?
As per the specifications and validation rules mentioned on the IRP sandbox portal and e-invoicing schema, transaction of ‘Reverse Charges’ is allowed only for B2B invoices. The supplier needs to generate the IRN. The JSON schema does not accept “URP” for supplier GSTIN. URP indicates unregistered parities. The interpretation is that for purchases from unregistered parties for which self-invoices are created, IRN is not required.
Who can generate IRN
As per specifications and validation rules mentioned on IRP sandbox portal request for the IRN/e-Invoice can be made only by the supplier of the goods or services. However, the e-Commerce Operator can request for the IRN/e-invoice on behalf of the supplier. In this case, the e-Commerce Operator should have registered on the GST portal accordingly.
Read this article if you have received an E-invoice and want to verify if it is valid.