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All about Invoice Reference Number (IRN)

Updated on

IRN known as Invoice Reference Number is a unique number alloted by Government to tag and identify every valid e-invoice generated in India, starting from January 2020 initially to be introduced on trial basis.

Latest Updates

Update as on 30th July 2020

  1. A new refined format of e-invoice has been notified by CBIC adding 20 new fields and removing 13 fields. Certain fields have undergone changes in character length as well.
  2. e-Invoicing system shall apply to those taxpayers with annual turnover exceeding Rs 500 crore instead of Rs 100 crore.
  3. Special Economic Zones (SEZ) units shall also be exempted from issuing e-invoices.

Update as on 23rd March 2020

The implementation of e-invoicing and the QR code has been deferred to 1st October 2020.

Exemption from e-Invoicing and QR code has been granted to sectors such as the insurance, banking, financial institutions, NBFCs, GTA, and passenger transportation service and movie tickets.

The e-invoicing system has been introduced to create a standard for all e-invoices generated. In this article, we will be dealing with the following aspects about Invoice Reference Number (IRN) in an e-invoice:

 

What is an Invoice Reference Number (IRN)?

The Invoice Reference Number (IRN) is a unique number (also known as hash) generated by the Invoice Registration Portal (IRP) using a hash generation algorithm, under the new e-invoicing system. For every document such as an invoice or debit or credit note to be submitted on the GST portal/e-way bill portal, an invoice reference number shall be generated.

 

What is the hash generation algorithm in IRN?

A hash generation algorithm is a function that converts a message or a string consisting of characters (alphabets + numbers + certain special characters) into a series of numbers such that the resulting numbers cannot indicate the original message.

The GSTN will prescribe this algorithm as part of the e-invoicing standard.

 

What are the parameters used to generate Invoice Reference Number (IRN)?

IRN is generated by converting characters into numbers (also called ‘hash’) using a hash generation algorithm. This algorithm will be applied to the following three parameters:

  1. Supplier GSTIN
  2. Supplier’s invoice number
  3. The financial year in ‘YYYY-YY’ format. For example 2019-20.

 

When is the Invoice Reference Number (IRN) generated?

The invoices under the new e-invoicing system will continue to be prepared using any software that a business entity uses to generate invoices. However, they will have to conform to the prescribed standard and parameters.

Further, the software should also be able to generate a JSON of the invoices. After the JSON is generated, depending on the resources available within the entity, either of the following two options can be selected:

Option 1: Upload the JSON of the e-invoice into the IRP.
Option 2: Generate the hash using the prescribed hash algorithm and then upload the e-invoice along with the hash into the IRP. The taxpayers can make use of the accounting softwares or billing softwares who will incorporate the algorithm in their software. Here, they may pre-print it on the invoice but it becomes valid only once registered on the IRP with invoice detail.

If the first option is selected, the IRP will generate the hash and this would become the IRN of the e-invoice.

If the second option is selected, the IRP will first validate the uploaded hash to check if it has followed the prescribed format. If it is validated, then such hash generated will be the IRN of the e-invoice.

Note: In both the cases, the IRP will perform a de-duplication check where the IRN so generated will be checked against the Central Registry of the GST System (containing all generated/uploaded IRN) to ensure that all IRN remain unique.