E-Invoicing Under GST: Rules, Eligibility & Process Explained

E-invoicing is hassle-free and a smarter way to create and manage invoices digitally. It is mandatory for businesses with turnover above ₹5 crore. This applies mainly to B2B and export transactions. The invoices are generated, validated, and authenticated through the Invoice Registration Portal (IRP). The e-invoice consists of a unique IRN and QR code. It also updates your GST returns. In simple terms, e-invoicing helps the business stay fully compliant, avoid errors, and work more efficiently.

In this guide:

• What Is an E-Invoice?
• Features of E-Invoicing
• Eligibility Criteria for E-Invoicing
• Exempted Entities
• Step-by-Step Registration Process for E-Invoicing
• Final Thoughts
• Frequently Asked Questions about E-Invoicing

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What Is an E-Invoice?

An invoice which is electronically generated, authenticated, and reported through a designated government portal before it is issued to the buyer. E-invoicing is implemented to ensure transparency, reduce tax evasion, and streamline compliance. Once an invoice is generated, it is uploaded to the Invoice Registration Portal (IRP), where a unique Invoice Reference Number (IRN) and a QR code are assigned to it.

It is mandatory to generate e-invoices for businesses with turnover exceeding ₹5 crore (as of Aug 2023). E-invoices are to be generated for all B2B and export invoices.

Note: An Invoice Reference Number (IRN) is a unique 64-character alphanumeric string generated by the government’s Invoice Registration Portal (IRP) for electronic invoices (e-invoices) under GST.

Features of E-Invoicing

1. Standardised Format

It uses a uniform structure (JSON format) as prescribed by the government. This ensures consistency across businesses and simplifies data exchange between systems.

2. Real-Time Validation

Errors are reduced as invoices are validated instantly through the IRP.

3. Unique Invoice Reference Number (IRN)

The IRN acts as an identity for each and every invoice generated through the IRP, which helps prevent duplication.

4. QR Code Integration

Quick verification is enabled through the generation of a QR code along with the IRN. This QR code consists of details such as supplier information, invoice value, and the IRN.

5. Auto-Population of GST Returns

As e-invoices are generated, they get auto-populated into the GST returns. This reduces manual entry and improves accuracy.

6. Reduced Compliance Burden

The time spent on compliance tasks is reduced as the invoicing process is automated through e-invoicing.

Eligibility Criteria for E-Invoicing

1. Turnover Threshold

Businesses must mandatorily generate e-invoices if their aggregate turnover exceeds ₹5 crore, applicable from 1st August 2023.

History of e-invoicing in terms of the threshold limits:

Effective Date	Turnover Limit (Aggregate)
1 Oct 2020	₹500 crore and above
1 Jan 2021	₹100 crore and above
1 Apr 2021	₹50 crore and above
1 Apr 2022	₹20 crore and above
1 Oct 2022	₹10 crore and above
1 Aug 2023	₹5 crore and above

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2. Applies to Specific Transactions

E-invoices must be generated mandatorily for the following transactions:

• B2B (Business-to-Business) invoices: An e-invoice must be generated when sales take place between two GST-registered entities.
• B2G (Business-to-Government) invoices: An e-invoice is to be generated when the seller is a registered entity and the buyer is a government entity.
• Export invoices: When invoices are raised for export-related transactions, e-invoices are to be generated mandatorily.
• Credit Notes: Invoices related to sales returns which are tagged with sales made to registered dealers.
• Debit notes: Debit notes raised for price escalation or de-escalation on sales-related transactions.
• RCM invoices: When sales are made for goods or services enabled under the Reverse Charge Mechanism, it is mandatory to generate an e-invoice, though GST would not be calculated in the invoice.

Exempted Entities

Following are the entities which are exempted from generating e-invoices:

• Small businesses below the turnover threshold
• SEZ units
• Banks, financial institutions, and NBFCs
• Goods transport agencies (GTAs) and passenger transportation services
• Insurance sector
• Entertainment sector

Step-by-Step Registration Process for E-Invoicing

Following are the steps to be followed for registering under GST:

1. GST Registration

A business must be registered under GST and have a valid GST Identification Number (GSTIN).

2. Access the E-Invoice Portal

Visit the official e-invoice portal managed by the government. This portal is used for generating and managing e-invoices.

3. Login Using GST Credentials

Users can log in using their GSTIN and password. If the user is new, they may need to create login credentials.

4. Register on the Invoice Registration Portal (IRP)

• Select the registration option.
• Enter GSTIN and captcha code.
• Verify details through OTP (sent to the registered mobile number/email).

5. Create User Credentials

After verification, create a username and password for accessing the IRP.

6. Integrate with Accounting Software

Businesses can integrate their ERP or accounting software with the IRP using APIs. Alternatively, they can upload invoices manually in JSON format.

7. Generate E-Invoices

• Prepare the invoice in the standard format.
• Upload the invoice to the IRP.
• Receive the IRN and QR code.
• Share the validated invoice with the buyer.

Final Thoughts

E-invoicing is a major step taken under GST towards making India’s tax system digital, transparent, and efficient. Features like real-time validation, standardised formats, and automation of invoices in the GST return help reduce errors.

The gradual lowering of the turnover threshold limit shows the government’s efforts to bring more businesses into the structured system. E-invoicing helps businesses save time, improve accuracy, and manage their finances better.

Frequently Asked Questions about E-Invoicing

What is e-invoicing under GST?

E-invoicing under GST is a system where invoices are generated electronically and authenticated through the Invoice Registration Portal (IRP). Each invoice receives a unique Invoice Reference Number (IRN) and QR code for validation.

Who is required to generate e-invoices under GST?

Businesses with aggregate turnover exceeding ₹5 crore are required to generate e-invoices.

What is an Invoice Reference Number (IRN) in e-invoicing?

An Invoice Reference Number (IRN) is a unique 64-character alphanumeric number generated by the Invoice Registration Portal (IRP) for every valid e-invoice under GST.

What are the benefits of e-invoicing for businesses?

E-invoicing benefits businesses by reducing manual errors, improving GST compliance, automating return filing, enabling real-time invoice validation, and simplifying invoice management.

Which transactions require mandatory e-invoicing under GST?

E-invoicing is mandatory for B2B invoices, export invoices, B2G transactions, debit notes raised for price escalation post-sale, credit notes, and certain Reverse Charge Mechanism (RCM) transactions.

Which businesses are exempt from e-invoicing under GST?

SEZ units, banks, NBFCs, insurance companies, goods transport agencies, passenger transport services, and businesses below the prescribed turnover limit are exempt from e-invoicing.

How does the e-invoicing process work under GST?

Businesses generate invoices in a prescribed format and upload them to the Invoice Registration Portal (IRP). The IRP validates the invoice and generates an IRN and QR code before the invoice is shared with the buyer.