Electronic Invoicing or e-Invoicing under GST (Goods and Services Tax) has simplified the way small businesses manage their invoicing. It is a digital system where invoices are generated electronically and submitted to the Invoice Registration Portal (IRP) for authentication and recording.

It helps businesses reduce manual errors and simplify GST return filing. At the moment, e-Invoicing is only applicable to businesses whose annual turnover exceeds ₹5 crore.

What is e-Invoicing?

e-Invoicing under GST means preparing your business invoices electronically and getting authenticated by the GST e-Invoice portal. It eliminates the need to use paper bills and manually enter details into an invoice. Instead, businesses update and upload their invoice details online via e-Invoicing. The system then creates a distinct Invoice Reference Number (IRN) and a QR code (IRN QR) for each invoice.

The IRN and the QR code ensure that the invoice is authentic and registered in the GST system of the government. This eliminates billing fraud, proper tax reporting, and simplifies the GST filing.

e-Invoicing, however, does not mean creating invoices on the GST portal directly. You can create invoices with your accounting software, but you must connect them to the e-Invoice portal to create the IRN and QR automatically.

e-Invoice Threshold for Applicability

Here is an e-Invoice threshold that businesses should meet in order to qualify for e-Invoicing:

• e-Invoicing is applicable to all companies whose total annual turnover is ₹5 crore or above.
• If your business turnover is less than ₹5 crore, you are not obliged to generate e-Invoices. However, once your business exceeds this e-Invoice threshold even once, e-Invoicing will be compulsory in the following financial year.
• Businesses with an annual turnover of ₹100 crore and above will be required to report their invoices and credit/debit notes to the IRP within 7 days of issue.

Suppose that your business turnover in FY2025-26 will be ₹10 crore. You will have to start generating e-Invoices for your sales in FY2025 26.

Threshold Limit	Date of Applicability
₹500 crore	October 1st, 2020
₹100 crore	January 1st, 2021
₹50 crore	April 1st, 2021
₹20 crore	April 1st, 2022
₹10 crore	October 1st, 2022
₹5 crore	August 1st, 2023

How Does e-Invoicing Work: Step-by-Step Process

Here is how the e-Invoicing under GST works:

Step 1: Invoice Generation (ERP/Accounting Software)

You create a standard GST invoice using a business software or billing system. The e-Invoice must include the buyer and seller GSTIN, invoice amount, tax rate, and item information.

Step 2: Upload to Invoice Registration Portal (IRP)

You must now upload invoice details on the Invoice Registration Portal (IRP). It is a government portal that authenticates and registers your invoice. The IRP then verifies the information and makes sure that it is unique and valid.

Step 3: Generation of IRN and QR Code

Upon approval, IRP assigns a distinct Invoice Reference Number (IRN) and a QR Code to that invoice (IRN QR).

• IRN (Invoice Reference Number): This is a 64-character code that is used to identify your e-Invoice.
• QR Code: This is key invoice information that can be scanned and verified in a short period of time.

Step 4: Automatic Sharing with GST and E-Way Bill Systems

Once the invoice is validated, the information is automatically shared with:

• Use the GST portal to pre-fill your return data.
• The E-Way Bill system, when necessary, assists in the generation of transport documents.

IRN & QR Code in e-Invoicing

When you generate an e-Invoice using GST, two important things are generated: the IRN (Invoice Reference Number) and the QR Code. These confirm that your invoice is valid and registered in the e-Invoice portal of the government.

What is IRN (Invoice Reference Number)?

Each e-Invoice is assigned a special 64-character code known as the IRN. It is generated by the IRP after the validation of your invoice information. Imagine it as a digital stamp that will confirm that your invoice is authentic and accepted by the GST system. The IRN of two invoices cannot be similar, which means it helps in avoiding fraud and duplication.

What is the QR Code?

The IRP also produces a QR Code of the invoice together with the IRN. The important information in this Quick Response Code includes:

• Supplier’s GSTIN
• Buyer’s GSTIN
• Invoice number
• Invoice date
• Total invoice value
• HSN codes and tax amounts
• IRN (Invoice Reference Number)

The QR Code can be scanned by anyone (buyers, auditors, or tax officers) with the help of a mobile application or a scanner to check whether the invoice is authentic.

e-Invoicing Setup and Integration

Businesses must integrate their billing or accounting system with the IRP to start using e-Invoicing under GST. This integration helps businesses move invoices automatically to the GST system.

1. Prepare Your ERP System: Ensure that your ERP or billing software is PEPPOL standard-compliant and contains all the required e-Invoice fields as required by CBIC. Get your software vendor to support the e-Invoice schema.
2. Select Your IRN Generation Method: Here are the different ways to generate IRN:
   1. Direct API integration (by allowing your system IP on the e-Invoice portal)
   1. By a GST Suvidha Provider (GSP)
   1. Using the bulk generation tool, which uploads a JSON file to the IRP
3. Create the Invoice: Create the invoice in your billing or ERP software, and ensure it contains:
   1. Name, address, GSTIN of buyer and supplier
   1. Invoice number and date
   1. Description, quantity and rate of the items.
   1. Value of taxation and the rate of GST
4. Upload Invoice Details: Submit the invoice information to the IRP through:
   1. JSON file upload
   1. GSP or third-party app
   1. Direct API connection
5. IRP Validation: The IRP authenticates the data, eliminates duplicates, and creates a unique IRN with:
   1. Seller GSTIN
   1. Invoice number
   1. Financial year
   1. Document type (INV/DN/CN)
6. Notification & Integration: The IRP automatically forwards the e-Invoice to:
   1. To auto-fill your GSTR-1 return.
   1. The E-Way Bill portal is used, where necessary, to streamline transport compliance.

e-Invoicing Compliance and Penalties

e-Invoicing is mandatory for businesses whose annual turnover exceeds ₹5 crore. Failure to generate the IRN results in severe consequences, not only in the form of penalties but also in the form of GST returns and input tax credit problems. Here is what happens if you do not generate an e-Invoice:

• Your invoice becomes invalid under the GST law.
• That invoice cannot be claimed under the Input Tax Credit (ITC) by the buyer.
• The invoice will not appear in GSTR-1 or E-Way Bill data.
• The GST department may impose fines and legal notices on you.

Penalties Under GST Rules

• For not issuing an e-Invoice: Penalty of ₹10,000 per invoice or 100% of the amount of tax payable, whichever is greater.
• Wrong or incomplete information: A penalty of ₹25,000 may apply.

e-Invoicing assists in minimising mistakes, saving time, and ensuring compliance. e-Invoicing helps enhance regulatory compliance and operational efficiency. Another benefit of e-Invoicing is that it improves approval chances when you apply for a business loan.

Frequently Asked Questions (FAQs)

1. Who has to create e-Invoices?

Businesses with an annual turnover exceeding the ₹5 crore threshold limit are mandated to generate e-Invoices on all B2B transactions.

2. What is the existing turnover limit of e-Invoicing?

e-Invoicing is applicable to businesses that have a turnover of ₹5 crore or above in any financial year since 2017-18.

3. Should small businesses below ₹5 crore adhere to e-Invoicing?

No, e-Invoicing is not required for small businesses with an annual turnover of ₹5 and below.

4. What is an IRN in e-Invoicing?

IRN (Invoice Reference Number) is a 64-character code that is created by the Invoice Registration Portal (IRP) to confirm all valid GST invoices.

5. What is the QR Code of an e-Invoice?

All important invoice information, such as GSTIN, invoice number, amount, and IRN, is included in the QR code.

6. How does e-Invoicing differ from normal GST invoices?

In normal invoices, details are entered manually in GST returns. In e-Invoicing, the data moves automatically between your billing software and the GST system, eliminating mistakes and duplication.

7. Is any special software required to create e-Invoices?

You can use the NIC e-Invoice portal or integrate your ERP/accounting software with a GSP (GST Suvidha Provider) to automatically generate e-Invoices.

8. Can e-Invoicing be done manually?

Yes, small businesses may manually post invoice information on the NIC e-Invoice portal when they are not using billing software.

9. What will happen if I do not produce an e-Invoice?

The invoice is invalid under GST, and you can be fined ₹10,000 per invoice or 100% of the tax payable, whichever is greater.

10. Does e-Invoicing have an impact on E-Way Bills?

Yes. After the generation of an e-Invoice, a portion of the E-Way Bill information is automatically completed.