GST E-Invoicing: Who Must Comply, How It Works, and What Happens If You Don't

GST e-invoicing has been one of the most significant compliance changes in recent years, and the government has been steadily lowering the turnover threshold to bring more businesses into its ambit. If your business has an aggregate annual turnover above ₹5 crore, e-invoicing is already mandatory for you. If you are below that threshold, it is only a matter of time.

This guide explains the complete e-invoicing framework — who must comply, how the Invoice Registration Portal (IRP) works, what documents are covered, and the consequences of non-compliance.

E-invoicing under GST does not mean generating invoices electronically in your accounting software. It means reporting your B2B invoices to the government's Invoice Registration Portal (IRP) in real time, and receiving a unique Invoice Reference Number (IRN) and a QR code that must be printed on the invoice.

The IRP validates the invoice data, assigns the IRN, and shares the data with the GST portal (for auto-population of GSTR-1) and the e-way bill portal (for auto-generation of e-way bills where applicable).

Current threshold: ₹5 crore aggregate annual turnover in any preceding financial year from FY 2017-18 onwards.

"Aggregate annual turnover" includes turnover of all GSTINs under the same PAN across India — not just one state or one registration.

E-invoicing is mandatory for the following documents issued in B2B transactions:

• Tax invoices (for taxable supplies to registered persons)
• Credit notes (issued to registered persons)
• Debit notes (issued to registered persons)
• Export invoices (zero-rated supplies)
• Invoices to SEZ units (with or without payment of tax)
• Deemed export invoices

• B2C invoices (supplies to unregistered persons) — not required, though a QR code is mandatory for B2C invoices above ₹500 for applicable taxpayers
• Nil-rated and exempt supplies
• Invoices for non-GST supplies
• Delivery challans
• Financial / commercial credit notes (not related to GST adjustments)

Even if your turnover exceeds ₹5 crore, certain categories are exempt:

1. Insurance companies, banking companies, and financial institutions (including NBFCs)
2. Goods Transport Agencies (GTAs) supplying services by road
3. Passenger transport service providers
4. Multiplex cinema operators (for admission tickets)
5. Special Economic Zone (SEZ) units — note: SEZ developers are not exempt
6. Government departments and local authorities (to the extent they are not required to obtain GST registration)

Create the invoice in your ERP or accounting software (Tally, Zoho Books, QuickBooks, SAP, etc.) in the standard format. The invoice must contain all mandatory fields as per GST rules.

The invoice data (in JSON format) is uploaded to the IRP — either:

• Directly through the IRP portal (manual upload, suitable for low volumes)
• Via API integration (your accounting software connects directly to the IRP — recommended for businesses with significant invoice volumes)
• Through a GSP (GST Suvidha Provider) — third-party service providers who offer IRP connectivity

The IRP:

1. Validates the invoice data (checks for duplicate invoices, validates GSTIN of supplier and recipient, verifies mandatory fields)
2. Generates a unique Invoice Reference Number (IRN) — a 64-character hash
3. Generates a digitally signed QR code containing key invoice details
4. Returns the IRN and QR code to the supplier

The entire process typically takes a few seconds.

The IRN and the QR code must be printed on the invoice before it is issued to the buyer. An invoice without an IRN is not a valid tax invoice for GST purposes.

The IRP shares the invoice data with the GST portal. The invoice details are auto-populated in your GSTR-1 (Table 4A for B2B supplies). You still need to review and submit GSTR-1 — auto-population does not mean auto-filing.

A critical rule that many businesses miss: invoices must be reported to the IRP within a specified time limit.

Currently, for taxpayers with turnover above ₹100 crore, the time limit is 30 days from the date of the invoice. For others, there is currently no prescribed time limit — but the government has indicated it will extend the 30-day rule to all e-invoicing taxpayers.

Best practice: Report invoices to the IRP on the same day they are issued. Delayed reporting creates reconciliation issues and risks non-compliance.

An e-invoice can be cancelled on the IRP within 24 hours of generation. After 24 hours, the IRN cannot be cancelled on the IRP — you must issue a credit note instead.

Important: Cancellation on the IRP does not automatically cancel the e-way bill. If an e-way bill was generated for the invoice, it must be cancelled separately.

Issuing an invoice without a valid IRN (when e-invoicing is mandatory) has serious consequences:

1. The invoice is not a valid tax invoice — the buyer cannot claim Input Tax Credit (ITC) on the basis of such an invoice
2. Penalty under Section 122 — ₹10,000 per invoice or the amount of tax evaded, whichever is higher
3. ITC reversal for the buyer — if the buyer has claimed ITC on an invoice without IRN, the ITC will be reversed with interest
4. Scrutiny and audit risk — mismatches between GSTR-1 data and IRP data trigger automated notices

Many businesses using older versions of Tally or custom ERP systems find that their software does not support direct IRP integration. Solution: upgrade to a version that supports e-invoicing, or use a GSP.

Businesses with thousands of invoices per day need robust API integration. Manual upload is not practical at scale.

If an invoice needs to be amended after the 24-hour cancellation window, you must issue a credit note and a fresh invoice. The original IRN cannot be modified.

If your IRP connection fails at the time of invoicing, you cannot issue a valid invoice. Businesses need a backup process — either a secondary IRP connection or a GSP with offline buffering capability.

If your business has multiple GSTINs (different states), each GSTIN must be separately configured for e-invoicing. The IRN is unique per GSTIN.

1. Check your eligibility — Calculate your aggregate turnover across all GSTINs under your PAN for the preceding financial years.
2. Assess your current software — Determine whether your accounting software supports IRP integration.
3. Choose your integration method — Direct API, GSP, or manual upload depending on your invoice volume.
4. Register on the IRP — Register your GSTIN on the IRP portal (einvoice1.gst.gov.in).
5. Test in the sandbox — The IRP provides a sandbox environment for testing before going live.
6. Train your accounts team — Ensure your team understands the process, especially for cancellations and amendments.
7. Update your invoice template — Ensure your invoice format includes fields for IRN and QR code.

The government has consistently lowered the e-invoicing threshold since its introduction. Industry observers expect the threshold to be reduced to ₹1 crore or even lower in the coming years. Businesses below ₹5 crore should begin preparing their systems now rather than scrambling when the threshold drops.

Our GST compliance team assists businesses with:

• Eligibility assessment and threshold calculation
• IRP registration and setup
• Accounting software evaluation and GSP selection
• Staff training on the e-invoicing process
• Ongoing compliance monitoring and reconciliation

Contact us to ensure your e-invoicing setup is correct and compliant.