Invoice Reference Number in e invoicing under GST 

In business transactions, invoices are important. They are the documents that detail the goods or services provided, along with the payment terms. But within this seemingly straightforward document lies an important element ie; the Invoice Reference Number. Let’s dive into what it is, why it matters, and how it simplifies your financial processes. 

What is an Invoice Reference Number?

An Invoice Reference Number (IRN) is a unique identifier assigned to each invoice generated under the e-invoicing system in India. It’s a 64-character alphanumeric string that helps in identifying and tracking invoices electronically. This number distinguishes one invoice from another, helping you and your clients keep track of payments and transactions easily.  

The hash is a critical part of the IRN, generated using the Goods and Services Tax (GST) system’s Invoice Registration Portal (IRP). It’s a mathematical function that converts input data into a fixed-size string of characters. 

What is hash in the Invoice Reference Number?

A hash is a cryptographic function that generates a fixed-length string of characters from specific data contained in an invoice. This hash is a crucial component of the IRN, contributing to its uniqueness and security. 

  • Data Selection:
    • Certain data points from the invoice are selected. These typically include details such as the supplier’s GSTIN (Goods and Services Tax Identification Number), invoice number, invoice date, invoice value, and other relevant information. 
  • Hash Generation:
    • The selected data is processed through a cryptographic hash function. In the case of IRNs used in India’s e-invoicing system, the hash function employed is often SHA-256 (Secure Hash Algorithm 256-bit).
    • This function produces a fixed-length string of characters, typically 64 characters in length. 
  • Uniqueness and Security:
    • The hash generated is unique to the specific combination of data points used as input. Even a small change in any of the input data will result in a completely different hash.
    • This property ensures that each invoice has a distinct IRN, preventing duplication and ensuring authenticity. 
  • Verification:
    • The hash is an essential component of the IRN for verification purposes. When tax authorities or other entities need to verify the authenticity of an invoice, they can regenerate the hash using the same data points from the invoice.
    • If the hash matches the one stored in the IRN, it confirms that the invoice has not been tampered with and is authentic. 

What is the hash generation algorithm in IRN?

The hash generation algorithm in IRN involves creating a SHA-256 hash of specific invoice data. SHA-256, known as Secure Hash Algorithm 256-bit, is a common way to make a unique code with 256 bits (32 bytes). 

Why does an Invoice Reference Number matter?

  • Organization and Tracking:
    • With a unique reference number on each invoice, you can efficiently organize and track your financial transactions.
    • Whether it’s for accounting purposes or simply for filing, having a clear reference number makes the process smoother. 
  • Reduced Errors:
    • Imagine a scenario where two invoices have identical numbers. The Invoice Reference Number prevents such errors.
    • It ensures that each transaction has its own distinct identity, reducing confusion and potential mistakes. 
  • Easy Communication:
    • When discussing payments with clients or vendors, referring to the Invoice Reference Number ensures clarity in communication.
    • Both parties can easily locate and refer to the specific invoice in question. 
  • Audit Trail:
    • In case of audits or disputes, the Invoice Reference Number serves as an essential part of your audit trail.
    • It allows auditors or relevant parties to trace back transactions accurately, providing transparency and accountability. 

How to create an Invoice Reference Number?

Creating an Invoice Reference Number doesn’t have to be complicated. Here’s a simple format you can follow: 

  • Prefix:
    • Start with a prefix to indicate the type of transaction or your company name. For example, “INV” for invoice. 
  • Sequential Number:
    • Follow the prefix with a unique sequential number. This can be a series of numbers or a combination of letters and numbers. 
  • Date:
    • Optionally, you can include the date of the invoice to further differentiate it. This helps in quick identification, especially for recurring clients. 

For example: if your company name is “ABC Enterprises” and you’re issuing your third invoice on April 19, 2024, your Invoice Reference Number could be “ABC-INV-003-190424”. 

What are the parameters used to generate IRN?

To generate an IRN, several parameters from the invoice are used. These parameters typically include: 

  • Goods and Services Tax Identification Number, likely from the supplier. 
  • Supplier’s legal entity name 
  • Document type (Eg., Invoice, Credit note, Debit note) 
  • Document number 
  • Document date 
  • Invoice value (taxable amount) 
  • Invoice type (B2B, B2C, etc.) 
  • Place of supply (state code) 
  • IRN generation timestamp 
  • Hash of invoice data (computed using SHA-256 algorithm) 

When is the Invoice Reference Number generated?

The IRN is generated before the invoice is issued to the recipient. It’s a mandatory step in the e-invoicing system in India. Once the invoice details are finalized, including the items sold, their quantities, and prices, the IRN is generated along with a digitally signed QR code. This IRN and QR code are then added to the invoice before it’s issued to the recipient. 

What are the uses of Invoice Reference Number?

The Invoice Reference Number serves several purposes: 

  • Ensuring Compliance:
    • IRN ensures that each invoice issued under the GST system in India is unique and compliant with government regulations. 
  • Preventing Duplication:
    • By generating a unique IRN for each invoice, duplication and misuse of invoices are prevented. 
  • Enhancing Transparency:
    • IRN adds transparency to the invoicing process, making it easier for tax authorities to track and verify transactions. 
  • Simplifying Audits:
    • During audits, tax authorities can easily verify the authenticity of invoices by matching the IRN and other details. 
  • Streamlining Input Tax Credit (ITC):
    • IRN helps in streamlining the process of claiming as it ensures that only valid invoices are used for Input tax credit
  • Reducing Tax Evasion:
    • With a unique IRN for each invoice, tax evasion becomes more difficult, contributing to a fairer tax system. 


In conclusion, the Invoice Reference Number is a unique identifier for each invoice you issue. It’s like a fingerprint for your financial transactions, ensuring that each one is distinct and traceable. Every invoice is its unique identifier, the Invoice Reference Number. By understanding its importance and implementing a clear system, you streamline your financial processes, reduce errors, and ensure smooth communication with your clients and vendors. 

1. What is an Invoice Reference Number? 

An Invoice Reference Number is a unique identification code assigned to each invoice. It helps in identifying and tracking invoices electronically. 

2. How is the IRN generated? 

The IRN is generated using specific data from the invoice, like the supplier’s GSTIN, invoice number, date, and value. This data is processed through a cryptographic function to create a unique hash, which becomes the IRN. 

3. Why do I need an IRN for my invoices? 

Having an IRN is mandatory under the e-invoicing system. It ensures that each invoice is unique and complies with government regulations. It also helps in preventing duplication and ensures the authenticity of the invoice. 

4. When should I generate an IRN for my invoice? 

You should generate the IRN before issuing the invoice to the recipient. It’s a pre-requisite under the e-invoicing system in India. Once the invoice details are finalized, including items sold and their prices, you generate the IRN. 

5. How does the IRN benefit me? 

The IRN streamlines your invoicing process by ensuring compliance with tax regulations. It helps in preventing tax evasion and simplifies audits as tax authorities can easily verify the authenticity of invoices. Moreover, it contributes to a fairer tax system and reduces errors in invoicing. 

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