Invoice Reference Number (IRN) under GST

[Ganeshan Kalyani]

Rule 138A of Central Goods and Services Tax Rules, 2017 (CGST Rules) provides that a taxpayer can generate an Invoice Reference Number (IRN) on the basis of tax invoice. In order to generate IRN a taxpayer need to fill up FORM GST INV-1 by furnishing information from the invoice raised by the him. A taxpayer can produce IRN to the proper officer instead of tax invoice  if the officer intercept the vehicle on the transit.

In order to generate IRN a taxpayer has to fill up in FORM GST INV-1 information like GSTIN, legal name, trade name, address of the supplier, tax invoice number, date of invoice, GSTIN/ UIN, name, address, State with State code of the recipient/bill to and consignee/ ship to has to be furnished. And information like type of supply in to B2B, B2C, export, supplies to SEZ, deemed export also to be furnished. Taxpayer also to specify whether the supply attracts reverse charge, TCS (with GSTIN of operator), TDS (with GSTIN of TDS Authority) in the said form. The core information like description of goods, HSN, quantity, unit of measurement, price per unit, total value, discount, taxable value, IGST, CGST, SGST, Cess, freight, insurance, packing and forwarding charges, total invoice value both in figures and words also need to be furnished in FORM GST INV-01.

IRN could be generated from the e-way bill portal by uploading Form GST INV-01. The number so generated would be valid for a period of 30 days, within which it can be used in place of a tax invoice.

In 35th GST Council meeting held on 21st June, 2019 decided to introduce electronic invoicing system. This would be first initiated for B2B (business to business) transaction to be rolled out from January 2020. This in an endeavour to curb tax evasion. The GST Council has set up a committee to look into the feasibility of e-invoicing. The government is looking to introduce e-invoicing for large companies initially and later on to all taxpayers. The purpose of introducing e-invoicing is to bring transparency. When taxpayer fill up the above mentioned form in the government website the it will have details of all the invoicing raised by the taxpayer. Thus, government will have record of every transaction that the taxpayer will do in the course of his business.

On the other hand, the e-invoicing will help the taxpayer to reconcile their purchases with the supplies of the supplier with much ease as IRN is system generated number which will be in a particular manner. Every taxpayer will have the IRN so matching invoices would be an easy task comparatively.

Presently, every taxpayer has his own fashion of keeping invoice running serial number. As a reason the customer is facing lot of trouble in GSTR-2A reconciliation. Though the reconciliation is not mandatory to claim credit. But this is one of the requirement in the GST annual return. Thus, e-invoicing would help taxpayer to some extent in doing matching of purchases with the sales.

The government is doing all efforts to bring transparency in the compliance. The government expects that the taxpayer should do proper disclosure in the monthly return, pay the correct tax and claim correct input tax credit. Since, the same is not happening smoothly the government had come up with e-way bill and now is coming up with e-invoicing requirement. 

The activity of generating e-invoicing would be an addition task for the taxpayer. But it is said that e-way will be done away with once e-invoicing comes into effect. For this new requirement, the GST Suvidha Provider will come into rescue of the big company. They will do automation in the clients accounting package. As a result as soon as the invoice is raised by the taxpayer in his accounting system the tool will of GSP will pull the invoice details from the accounting package and push it to the government portal and from there e-invoice number would get generated. Comparatively, e-invoicing for a small companies will be an additional task.

Taxpayer is now required to focus more on compliance. The government is trying to make everything online. Initially GSTR-3B, GSTR-1, GSTR-2A, e-way bill and now GST RET-1/2/3, ANX-1, ANX-2 and e-invoicing. More and more vigilance is required for the taxpayer to keep himself abreast of the changes. Two years of GST passed by stabilizing the compliance part. This thrid year will be a lesson from the two year audit. Hopefully the financial year 2020-21 should be a year will clarity, stability.