Understanding Electronic Invoicing (e-Invoicing) under GST in India

Electronic invoicing, or e-invoicing, represents a critical compliance mechanism within India's Goods and Services Tax (GST) framework. This system mandates that specific GST-registered businesses electronically authenticate their B2B invoices and other relevant documents through an Invoice Registration Portal (IRP) authorized by the GST Network. Once an invoice, credit note, or debit note is validated by the IRP, it officially becomes an e-invoice. This streamlined approach to invoicing is now a fundamental requirement for many businesses.

Key aspects of e-invoicing include:

e-Invoice Threshold Limit: As of August 1, 2023 (per GST Notification 10/2023), e-invoicing is mandatory for businesses with an annual turnover exceeding Rs. 5 crore.
e-Invoice Time Limit: Starting April 1, 2025, businesses with an Annual Aggregate Turnover (AATO) of Rs. 10 crore or more must upload their e-invoices to the IRP within 30 days of issuance.
This system significantly reduces the occurrence of fraudulent GST invoices, thereby ensuring that only legitimate input tax credit claims are processed.

What is e-Invoicing Under GST?

'e-Invoicing' or 'electronic invoicing' refers to a system where Business-to-Business (B2B) invoices and certain other documents undergo electronic authentication by the GSTN. This authentication prepares them for subsequent use on a unified e-invoicing portal. It's important to note that e-invoicing does not entail creating invoices directly on a government platform; rather, it involves submitting a pre-generated standard invoice to a common e invoice portal. This process effectively automates various reporting requirements through a single entry of invoice details.

The GST Council initially decided to implement e-invoicing during its 35th meeting on June 21, 2019. While it first applied to large corporations, its scope has since expanded to include smaller businesses. Once authenticated, e-invoice data is transmitted in real-time to both the GST and e-way bill portals. This eliminates the need for manual data input when filing GSTR-1 and generating Part-A of e-way bills.

Who Must Generate an e-Invoice?

The requirement to generate an e-invoice is determined by the taxpayer's aggregate annual turnover (AATO) in a financial year. The e-invoicing thresholds have evolved as follows:

Phase	Applicable to taxpayers having an aggregate turnover of more than	Applicable from	Notification number
I	Rs 500 crore	01.10.2020	61/2020 – Central Tax and 70/2020 – Central Tax
II	Rs 100 crore	01.01.2021	88/2020 - Central Tax
III	Rs 50 crore	01.04.2021	5/2021 - Central Tax
IV	Rs 20 crore	01.04.2022	1/2022 - Central Tax
V	Rs 10 crore	01.10.2022	17/2022 – Central Tax
VI	Rs 5 crore	01.08.2023	10/2023 - Central Tax

If a taxpayer's turnover in the preceding financial year was below the specified threshold but subsequently increased beyond it in the current year, e-invoicing becomes applicable from the beginning of the subsequent financial year. For instance, if a business's AATO exceeds the limit in FY 2024-25, they must comply with e-invoicing from FY 2025-26 onwards. The aggregate turnover calculation encompasses the turnover of all GSTINs registered under a single PAN across India.

Where to Generate e-Invoices?

The Central Board of Indirect Taxes and Customs (CBIC) has designated a set of common portals for generating e-invoices, as per Notification No. 69/2019 – Central Tax.

Under the electronic invoicing system, each invoice receives an identification number from an Invoice Registration Portal (IRP), which is managed by the GST Network (GSTN). There are currently six IRPs. The National Informatics Centre (NIC) launched the first IRP at einvoice1.gst.gov.in, and more recently, einvoice2.gst.gov.in. Other authorized IRPs include Cygnet Infotech Private Limited, Defmacro Software Private Limited (operating through einvoice4.gst.gov.in/), Ernst & Young LLP, and IRIS Business Services Limited.

Transactions and Documents Covered by e-Invoicing

The e-invoicing mandate applies to the following transactions and documents:

Documents	Transactions
Tax invoices, credit notes, and debit notes under Section 34 of the CGST Act	Taxable Business-to-Business (B2B) sales of goods or services, Business-to-Government (B2G) sales of goods or services, exports, deemed exports, supplies to Special Economic Zones (SEZ) (with or without tax payment), stock transfers or supply of services to distinct persons, SEZ developers, and supplies subject to reverse charge under Section 9(3) of the CGST Act.

Exclusions from e-Invoicing

Notwithstanding the turnover criteria, e-invoicing is not applicable to specific categories of registered persons, as outlined in CBIC Notification No. 13/2020 – Central Tax and subsequent amendments:

Notified Businesses	Documents	Transactions
1) An insurer, a banking company, or a financial institution, including an NBFC 2) A Goods Transport Agency (GTA) 3) A registered person supplying passenger transportation services 4) A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services 5) An SEZ unit (excluded via CBIC Notification No. 61/2020 – Central Tax) 6) A government department and Local authority (excluded via CBIC Notification No. 23/2021 – Central Tax) 7) Persons registered in terms of Rule 14 of CGST Rules (OIDAR)	Delivery challans, Bill of supply, financial or commercial credit note or debit note, bill of entry, and ISD invoices.	Any Business-to-Consumer (B2C) sales, nil-rated or non-taxable or exempt B2B sale of goods or services, nil-rated or non-taxable or exempt B2G sale of goods or services, imports, high sea sales and bonded warehouse sales, Free Trade & Warehousing Zones (FTWZ), and supplies under reverse charge covered by Section 9(4) of the CGST Act.

Time Limit for e-Invoice Generation

According to an advisory issued on November 5, 2024, by the GSTN portal, the 30-day time limit for reporting e-invoices on IRP portals has been extended for taxpayers with an AATO of Rs. 10 crore and above. This change is set to become effective from April 1, 2025, providing businesses ample time for compliance.

Below is a timeline of developments concerning the e-invoice generation time limit:

Period	e-Invoice Reporting Requirement	Applicability (AATO Threshold)
Till Apr 30, 2023	No fixed time limit for generating/reporting e-invoices	All taxpayers under e-invoicing
May 1, 2023 – Oct 31, 2023	Govt announced 7-day time limit (but rule was not implemented)	Targeted at AATO ≥ Rs. 100 crore (kept in abeyance)
From Nov 1, 2023 onwards	Mandatory reporting of documents to IRP within 30 days	AATO ≥ Rs. 100 crore; extended to AATO ≥ Rs. 10 crore from 1 Apr 2025

Process of Generating an e-Invoice

Under the e-invoicing system, the fundamental process for generating and uploading invoice details remains consistent. This is typically done through Excel tools, JSON file uploads, or API integration, either directly or via a GST Suvidha Provider (GSP). The data then seamlessly flows for GSTR-1 preparation and e-way bill generation, with the e-invoicing system acting as the central facilitator.

The following stages are involved in implementing and raising an e-invoice:

Step 1: Reconfigure ERP for e-invoicing format

The taxpayer must ensure their ERP system is reconfigured to comply with PEPPOL standards. This involves coordinating with software service providers to integrate the mandated e-invoicing schema and its required parameters as notified by the CBIC.

Step 2: Choosing IRN generation method

Taxpayers primarily have two options for generating the Invoice Reference Number (IRN):

The computer system's IP address can be whitelisted on the e-invoice portal for direct API integration or integration through a GST Suvidha Provider (GSP).
Alternatively, download a bulk generation tool to upload invoices in bulk. This tool creates a JSON file that can be uploaded to the e-invoice portal to generate IRNs for multiple invoices simultaneously.

Step 3: Feed the invoice details into IRP

Once a method is selected, the invoice is raised using the respective ERP or billing software. All essential details must be provided, including the billing name and address, supplier's GSTN, transaction value, item rate, applicable GST rate, and tax amount. From April 1, 2025, all taxpayers, regardless of turnover, are required to use Two-Factor Authentication (2FA) for e-invoice and e-way bill generation.

Subsequently, the details of the invoice, particularly the mandatory fields, are uploaded to the IRP using a JSON file, an application service provider (app or through GSP), or direct API. The IRP functions as the central registrar for e-invoicing and its authentication. Other interaction modes, such as SMS-based and mobile app-based submissions, are also available.

Step 4: IRP validation on invoice

The IRP validates the critical details of the B2B invoice, checks for duplicates, and generates a unique Invoice Reference Number (IRN) based on four parameters: Seller GSTIN, invoice number, financial year (YYYY-YY format), and document type (INV/DN/CN).

The IRP then generates the IRN, digitally signs the invoice, and embeds a QR code within the Output JSON for the supplier. Concurrently, the supplier is notified of the e-invoice generation via email, if provided in the invoice.

Step 5: Passing on the e-invoice details

The IRP transmits the authenticated payload to the GST portal for GST returns. Additionally, relevant details are forwarded to the e-way bill portal, if applicable. This process automatically populates the seller's GSTR-1 for the relevant tax period, which in turn helps determine tax liability.

Taxpayers can continue to print their invoices with their logo as they currently do. The e-invoicing system solely mandates that all taxpayers report invoices to the IRP in an electronic format. For a comprehensive understanding, a step-by-step guide details the process of generating an e-invoice.

Benefits of e-Invoicing for Businesses

Businesses derive several advantages from the e-invoicing system initiated by GSTN:

e-Invoicing addresses a significant gap in data reconciliation under GST, thereby reducing mismatch errors.
It allows invoices created on one software to be read by another, enhancing interoperability and minimizing data entry mistakes.
The system enables real-time tracking of invoices issued by suppliers.
It facilitates backward integration and automates the GST return filing process, as relevant invoice details are auto-populated in various returns, particularly for generating Part-A of e-way bills.
Ensures faster availability of genuine input tax credit.
Reduces the likelihood of audits or surveys by tax authorities, as necessary transaction-level information is readily available.
Provides faster and easier access to formal credit avenues, such as invoice discounting or financing, especially beneficial for small businesses.
Contributes to improved customer relations and expanded prospects for small businesses to engage with larger enterprises.

How e-Invoicing Curbs Tax Evasion

e-invoicing plays a crucial role in mitigating tax evasion through the following mechanisms:

Tax authorities gain real-time access to transactions, as e-invoices must be compulsorily generated through the GST portal.
The system reduces opportunities for manipulating invoices, given that they are generated before a transaction is executed.
It minimizes the chances of fake GST invoices, ensuring that only genuine input tax credit can be claimed, as all invoices require generation via the GST portal. This enables GSTN to more easily track and match input and output tax details, flagging fraudulent tax credit claims.

What are the Mandatory Fields of an e-Invoice?

e-invoices must primarily adhere to the GST invoicing regulations. Additionally, they should accommodate the specific invoicing systems and policies adopted by various industries or sectors in India. While certain information is compulsory, other fields are optional, allowing users to complete only the relevant sections.

Here is an overview of the contents within the latest e-invoice format, as notified on July 30, 2020, via Notification No. 60/2020 – Central Tax:

It comprises 12 sections (both mandatory and optional) and six annexures, totaling 138 fields.
Out of the 12 sections, five are mandatory, and seven are optional. Two annexures are also mandatory.
The five mandatory sections cover basic details, supplier information, recipient information, invoice item details, and document totals. The two mandatory annexures pertain to item details and the overall document total.

There are 30 compulsory fields required in an e-invoice. Some of these include:

Sl. no.	Name of the field	List of choices/ specifications/sample Inputs	Remarks
1	Document Type Code	Enumerated List, such as INV/CRN/DBN	Type of document must be specified
2	Supplier_Legal Name	String Max length: 100	Legal name of the supplier must be as per the PAN card
3	Supplier_GSTIN	Max length: 15 Must be alphanumeric	GSTIN of the supplier raising the e-invoice
4	Supplier_Address	Max length: 100	Building/Flat no., Road/Street, Locality, etc. of the supplier raising the e-invoice
5	Supplier_Place	Max length: 50	Supplier’s location such as city/town/village must be mentioned
6	Supplier_State_Code	Enumerated list of states	The state must be selected from the latest list given by GSTN
7	Supplier Pincode	Six digit code	The place (locality/district/state) of the supplier’s locality
8	Document Number	Max length: 16 Sample can be “ Sa/1/2019”	For unique identification of the invoice, a sequential number is required within the business context, time frame, operating systems and records of the supplier. No identification scheme is to be used.
9	Preceeding_Invoice_Reference and date	Max length:16 Sample input is “ Sa/1/2019” and “16/11/2020”	Detail of original invoice which is being amended by a subsequent document such as a debit and credit note. It is required to keep future expansion of e-versions of credit notes, debit notes and other documents required under GST.
10	Document Date	String (DD/MM/YYYY) as per the technical field specification	The date when the invoice was issued. However, the format under explanatory notes refers to ‘YYYY-MM-DD’. Further clarity will be required. Document period start and end date must also be specified if selected.

It has also described every field along with sample inputs for interested users. It's noteworthy that certain fields previously required for the e-way bill format are now incorporated into the e-invoice, such as the sub-supply type.

Effective June 1, 2025, the Invoice Reporting Portal (IRP) will process invoice/document numbers as case-insensitive during e-invoice generation. The portal will automatically convert reported invoice numbers to uppercase before IRN generation. This change aligns with how invoice numbers are handled in GSTR-1.

Sample e-Invoice Format

Below is the notified e-invoice format.