A GST invoice or bill is issued by the supplier or seller to the buyer of goods and services which indicates the name of the parties involved, details of the supply and the amount due for the payment.
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Under e-invoicing, a taxpayer can easily verify an invoice using Invoice Reference Number (IRN) and QR Code allocated after approval by the Invoice Registration Portal (IRP). With these features, tax officials can without much of a stretch track e-invoices using the offline application.
Invoice reference Number (IRN)
The Invoice reference number under the new e-invoicing system can be defined as a unique identification number assigned to an invoice by the IRP and it is computed using a hash algorithm which ensures that the supplier does not need to submit a document more than once a financial year.
What is a Hash Algorithm?
To generate the hash, the GSTN uses the following input parameters which ultimately becomes the IRN.
These parameters are:
- Type of document (credit note, debit note, invoice)
- Document number
- Financial year
- Supplier GSTIN
Generating the IRN
The IRP will generate the hash for a document using the input parameters. The IRP will send this information to the Central Registry of the GST system to check for duplicates. It is computed by the IRP to become the IRN for the document.
Quick Response Code (QR code)
A QR code is a quick response code. It contains coded information about an e-invoice. It is a two-dimensional version of a barcode and can be scanned from any mobile device.
- GSTIN of the supplier
- GSTIN of the recipient
- Invoice number issued by the supplier
- Invoice generation date
- The taxable value of the invoice
- Number and details of items
- HSN code of the items
- Hash or IRN
As per the e-invoice schema implemented by the CBIC, the organization must print the QR code. Henceforth, all B2B suppliers and exporters generating e-invoices must print QR codes on them.
To start with, businesses that meet certain criteria will be able to generate compliant invoices using their accounting software. They will then go through the e-invoicing system where they will be assigned an IRN, DSC and QR code.
The system will auto-populate certain fields on the return forms to avoid data entry errors. Taxpayers can match the unique IRN with the reported invoices to track them. Since the system allows the real-time upload of documents, there will be fewer fake invoices, and easier record-keeping and tracking. This will reduce instances of tax evasion.