GST brings in transparency and develops mutual trust between the Revenue and the taxpayers. Most of the compliance process- return filing, registration and sometimes even proceedings intend to happen without meeting a tax officer in person! Let us now focus on one of GST’s new tool to achieve it’s objective-an Invoice Reference Number(IRN).
1. How does IRN help
Under normal circumstances, three sets of invoices are issued as follows:
- Original for the buyer
- Duplicate for the transporter
- Triplicate for the seller
Instead of the above paperwork, a transporter may opt for IRN as it digitizes the revenue process at the check posts. It reduces the waiting time for the transporter at the revenue check post and in turn, helps taxing authorities keep track of the goods being transported. There is no risk of losing an invoice if IRN is generated.
2. What is Invoice reference Number (IRN)
An IRN is a number which a GST registered taxpayer may generate from the eway bill portal by uploading an invoice in Form GST INV- 01. This will be valid for a period of 30 days and can be used instead of a physical tax invoice.
Hence, IRN is a boon for transporters who transport multiple consignments, where otherwise the documentation would have been burdensome. IRN tries to ease the process of documentation to a great level. IRN also serves a dual purpose where on generating it, a taxpayer can get Part A of his E-way bill auto-populated.
3. Detailed format of Form to obtain IRN
Let’s now understand what the form GST INV-1 looks like and what are the different details that must be filled in it. Let us group the form into four parts for better understanding
Form GST INV-1 is like any other form under the GST Law and begins with the basic details of the taxpayer/ supplier.
The following are contents of the Part-A:
1. GSTIN and the name of the supplier are auto-populated.
2. The address of the registered place of business or principal place of business needs to be entered.
3. Enter the Serial number and the date of the invoice.
Part B section requires the taxpayer to fill details about the recipient. The following details need to be entered:
1. The GSTIN (in case of a registered taxpayer) or a UIN (in case the recipient is an embassy or UN organisations)
2. The name of the recipient and consignee
3. Address and the state code of the recipient and consignee. The state code is the code that forms the first two digits of the GSTIN. For example, the state code for Karnataka would be 29 and so on.
4. The column details of the consignee is same as details of the recipient if both the parties being billed to and goods being delivered to is same.
However, in some cases, the GSTIN of both recipient and consignee can be same but with different addresses. In other cases, Party billed and shipped to can be having different GSTIN. For example, in case the goods are not received by the recipient and should be sent to the factory of job-worker or to a third party as directed by the recipient buyer or the factory of the buyer is in a different State.
Part C consists of details of type of supply that the taxpayer is making. Regarding the transaction, whether the supply is a B to B supply( Business to Business) or a B to C supply( Business to customer) must be declared.
Part D consists of all information related to the consignment of goods billed. It includes the following:
1. The description of goods and the HSN code.
2. The quantity and unit price, after which the taxable amount for calculating GST is determined.
3. After we have the taxable amount, it is important for us to know the GST type that would be applicable to us. Based on the type of transaction (inter-state or intra-state), CGST, SGST AND UTGST will be calculated.
4. Freight, insurance & Packing and forwarding charges need to be declared as stated in the Tax Invoice.
After filling up the form, upload on the eway bill portal and an IRN will be generated which can be used by the taxpayer and transporter in future.
4. Implementation status
As of today, though IRN has not been implemented and the taxpayers lie in the grey area, it is very clear that the Revenue has implemented multiple checkpoints to prevent tax leakage. This is noticeable in all forms which are based on similar lines (details in the Form GST INV 1 is similar to GSTR 1 for example). Therefore, it becomes the responsibility of the taxpayer to furnish accurate details and helps prevent any mismatch. Though the IRN was introduced to reduce the formalities at checkpoints until unless it’s actually used, we will never reap the benefits of it.