goods and service tax

Understanding the Cancellation Process for Invoice Reference Numbers in E-Invoicing

Introduction

The Indian Government is progressively instituting mandatory e-invoicing for an increasing number of suppliers. Currently, e-invoicing is compulsory for registered persons with an aggregate turnover exceeding INR 100 Crores in a financial year. However, starting from 1st April 2021, e-invoicing will be mandatory for all registered persons with an aggregate turnover above INR 50 Crores in a financial year. This article delineates the provisions surrounding the generation and cancellation of Invoice Reference Numbers (IRN).

Reasons for Cancellation of Invoice Reference Number (IRN)

Cancellation of an IRN is permissible for invoices that have already been uploaded to the Invoice Registration Portal (IRP) and for which an IRN has been generated. Key reasons for cancellation by suppliers include:

  • Cancellation of the order by the buyer
  • Errors in the e-invoice
  • Incorrect or erroneous entries in the e-invoice
  • Duplicate entries

Regulations for Cancellation of IRN

Important guidelines regarding the cancellation of an IRN include:

  • IRN cancellation is permitted only within 24 hours of its generation. After this period, suppliers must issue a debit note or credit note, or amend their Form GSTR-1 to correct the invoice details.
  • Cancellation is not possible if an e-way bill has already been generated or is active for the respective IRN.
  • Once an IRN is canceled, the corresponding invoice number cannot be reused for generating a new IRN.
  • Partial cancellation of an e-invoice (i.e., IRN) is not allowed.

Steps for Cancellation of Invoice Reference Number

To cancel an IRN within 24 hours of its generation, suppliers can use one of the following methods:

  1. Cancellation through the e-invoice portal
  2. Cancellation via ERP/accounting software using API direct integration or GSP integration with the portal

Instructions for Cancelling IRN via E-Invoice Portal

Follow these steps to cancel an IRN on the e-invoice portal:

  1. Navigate to https://einvoice1.gst.gov.in/.
  2. Click 'Login' and input your 'User name', 'Password', and the characters shown in the image.
  3. Select the 'e-invoice' option.
  4. Choose 'Cancel' from the drop-down menu.
  5. Input either ‘Ack No.’ or ‘IRN’.
  6. Click ‘Go’.
  7. The corresponding e-invoice will appear. Select the 'Cancel Reason' from the drop-down list and provide remarks if necessary.
  8. Click ‘Submit’.

Importantly, cancellation through ERP/accounting software using API direct integration or GSP integration with the portal is typically faster and more efficient. In this case, the supplier merely needs to mark the respective invoice as canceled, allowing the software to automatically interface with the Invoice Registration Portal for cancellation.

Conclusion

Understanding the process of IRN cancellation is essential for compliance with the e-invoicing regulations. Adhering to the stipulated conditions and following the proper steps can streamline the cancellation process, ensuring smooth operations for suppliers and adherence to the legal requirements set forth by the Government.