What Is E-Invoicing Under GST? Applicability, Process and Penalties

The name causes most of the confusion. E-invoicing under GST does not mean the invoice is created on a government website, and it does not replace your billing software. You still prepare the invoice in your own system. What changes is that, before the invoice is valid, its details must be reported to an Invoice Registration Portal (IRP). The IRP returns the invoice digitally signed, with a unique Invoice Reference Number (IRN) and a QR code.

That registration step is not a formality. For a business within the scheme, a B2B invoice without an IRN is not a valid tax invoice at all. The consequences fall partly on you and partly on your customer, whose input tax credit depends on it.

Who must issue e-invoices

E-invoicing applies to a registered person whose aggregate turnover exceeded ₹5 crore in any financial year from 2017-18 onwards. The threshold was brought down in stages and has stood at ₹5 crore since 1 August 2023.

Three points decide most cases:

• Aggregate turnover is PAN-based. It is the total across every GSTIN registered under the same PAN, in every state, including exempt and export turnover. A business with three registrations each turning over ₹2 crore is above the threshold for all three.
• "Any preceding financial year" means once in, always in. If you crossed ₹5 crore in 2022-23, you remain liable today even if turnover has since dropped. There is no exit when turnover falls.
• It starts from the next financial year. Crossing the threshold during a year makes e-invoicing mandatory from 1 April of the following year, because applicability is tested on preceding years.

The portal automatically "enables" taxpayers it believes are above the threshold, using return data. You can check your status on the e-invoice portal (einvoice.gst.gov.in) and self-enable if you are liable but not shown. Enablement is not the legal test, though: the turnover is. A business that is liable must comply whether or not the portal enabled it.

Who is exempt

The notification excludes certain classes of registered person entirely:

• SEZ units (but not SEZ developers, who are covered if above the threshold);
• insurers;
• banking companies and financial institutions, including NBFCs;
• goods transport agencies supplying services of transporting goods by road;
• suppliers of passenger transportation services;
• suppliers of admission to cinema exhibitions in multiplex screens;
• government departments and local authorities.

The exemption applies to the entity as a whole, not to particular supplies. A bank selling an old asset does not need to e-invoice the sale. Exempt suppliers can file a self-declaration on the e-invoice portal, and buyers can ask for a copy when they question why an invoice carries no IRN.

Which documents and supplies are covered

Taxpayers with very large turnover (above ₹500 crore) must additionally print a dynamic QR code on B2C invoices. That is a different requirement and does not involve the IRP.

How e-invoicing works, step by step

1. Confirm enablement. On the e-invoice portal, check your GSTIN's enablement status. Self-enable if needed.

2. Register on an IRP. There are currently six authorised IRPs, at einvoice1.gst.gov.in through einvoice6.gst.gov.in. Registration involves a one-time OTP verification of the mobile number and email registered with GST. Generating an IRN is free of charge on all of them. You may use more than one, which is useful if one is down.

3. Prepare the invoice in your own system. Your billing or accounting software must capture every mandatory field of the notified e-invoice schema (INV-01): supplier and recipient GSTIN, place of supply, document type, number and date, HSN, taxable value, rates and tax amounts. Most accounting packages generate the required JSON directly.

4. Report it to the IRP. Choose the method that fits your volume:

• web form on the IRP, for a handful of invoices a month;
• offline bulk upload tool, for moderate volumes;
• API, directly or through a GST Suvidha Provider, for anything integrated with an ERP;
• mobile app, for occasional use.

5. Receive the signed e-invoice. The IRP validates the data (including a duplicate check on supplier GSTIN, financial year, document type and number), computes the IRN as a hash of those details, and returns the invoice digitally signed, with the IRN, an acknowledgement number and date, and a QR code.

6. Issue the invoice with the QR code. Print or email the invoice to your customer carrying the QR code (and the IRN). The customer, or an officer on the road, can verify it with the GSTN e-Services app or the Search IRN facility on the e-invoice portal.

7. Let the data flow on. The IRP shares the e-invoice with the GST system. It auto-populates your GSTR-1, and Part A of the e-way bill can be generated from the IRN. From 1 August 2026, where an e-way bill is generated with or by the IRN for a bill-to/ship-to transaction, the Ship-to GSTIN has to be captured (or "URP" for an unregistered consignee). Check that your billing software has been updated for it.

Because GSTR-1 now feeds a GSTR-3B whose outward liability you cannot edit, a wrong e-invoice ends up as a wrong tax figure. Our guide on how to file GSTR-3B covers where those figures go and how GSTR-1A is used to correct them.

The 30-day reporting limit

From 1 April 2025, taxpayers with aggregate annual turnover of ₹10 crore or more cannot report an e-invoice on any IRP more than 30 days after the document date. An invoice dated 1 April cannot be reported after 30 April. The IRP's validation simply rejects it. The limit applies to invoices, credit notes and debit notes alike. (It first applied, from 2023, to taxpayers at ₹100 crore and above.)

Taxpayers below ₹10 crore have no portal cut-off for now. That does not make late reporting compliant. The rules contemplate the IRN being obtained before the invoice is issued, and an invoice handed over without one is not valid in the meantime.

Credit notes are where the limit bites in practice. A rate dispute settled in month three produces a credit note that cannot be dated back to the original invoice month, so it has to be issued and reported in real time.

Cancelling or correcting an e-invoice

• Within 24 hours of generation, the IRN can be cancelled on the IRP. Cancellation is for the whole document; partial cancellation is not possible. If an e-way bill was generated against it, cancel the e-way bill first.
• The invoice number cannot be reused once an IRN has been generated on it, even after cancellation. Issue the replacement under a new number.
• After 24 hours, the e-invoice cannot be cancelled on the portal. Correct it by issuing a credit note (reported as an e-invoice) and, if the supply stands, a fresh invoice.

Penalties and consequences

The invoice is invalid. Under Rule 48(5), an invoice issued by a notified person without following the e-invoice procedure is not treated as an invoice. Everything else follows from that.

Penalty on the supplier. Supplying goods or services without a valid invoice attracts a penalty under Section 122 of ₹10,000 or the amount of tax evaded, whichever is higher. Lesser contraventions with no specific penalty fall under the general penalty in Section 125, up to ₹25,000.

The customer's input tax credit. A recipient needs a valid tax invoice to claim credit under Section 16. A buyer who receives a non-IRN invoice from a supplier who should be e-invoicing risks losing that credit on scrutiny. For that reason, informed buyers now refuse to pay invoices without a QR code, which is often what brings the issue to light. The credit conditions are covered in our post on Section 16 and input tax credit.

Goods in transit. Goods moving on an invalid invoice can be detained under Section 129, with penalty for release.

Scrutiny. The department compares e-invoice data, e-way bill data and GSTR-1. Differences between them are a routine trigger for ASMT-10 and DRC-01B, and answering them is covered in what to do if you get a GST notice.

What if it goes wrong?

• You crossed ₹5 crore and never started. Start now: register on an IRP and generate IRNs for every B2B invoice from today. For past invoices, take advice on the exposure. The tax was usually paid through GSTR-1 and GSTR-3B, so the risk is chiefly penalty and your customers' credit, and the response depends on how many invoices and customers are involved.
• The 30-day window has passed for an invoice. The IRP will not accept it, and there is no portal override. The usual course is to raise a fresh document within the window and reflect the correction consistently in GSTR-1. For material amounts, get advice before doing so, because the tax period and interest may shift.
• An IRN went out with the wrong GSTIN or value. Cancel within 24 hours. After that, issue a credit note and a fresh invoice, and tell the customer so that both of you reverse and re-take credit in the same period.
• The IRP is down. Report on another of the six IRPs; the duplicate check works across all of them, so the same invoice cannot be registered twice.
• Your GSTR-1 does not match your e-invoices. Fix it before filing GSTR-3B, through GSTR-1A for the same period if 3B is not yet filed. If the mismatch has already flowed into a filed return, see what happens when returns go wrong or late.
• You are exempt but customers keep asking. File the exemption self-declaration on the e-invoice portal and share the acknowledgement.

E-invoicing works smoothly once it is built into the billing routine and checked against GSTR-1 every month. Our GST return filing service includes that reconciliation of e-invoice data against returns.