e-Invoicing Under GST – Applicability, Limits & Rules

e-Invoicing Under GST – Applicability, Limits & Rules. ‘e-Invoicing’ or electronic invoicing is a system introduced by the Government of India to simplify and automate the invoicing process for B2B transactions under the Goods and Services Tax (GST). This system requires businesses to submit their already generated invoices on a designated e-invoice portal, known as the Invoice Registration Portal (IRP). The IRP then validates and authenticates the invoice by generating an Invoice Reference Number (IRN) and a unique QR code.
The main objective of e-Invoicing is to ensure that data between taxpayers and the government is easily integrated and reduces manual errors. The entire process enables real-time data sharing with the GST portal and the e-way bill portal, making it simpler to file GSTR-1 and generate e-way bills without additional manual intervention.
Latest Updates on e-Invoicing under GST
On 5th November 2024, a new advisory from the GSTN portal announced that businesses with an Annual Aggregate Turnover (AATO) of Rs. 10 crore or more will need to report e-invoices on IRP portals within 30 days of issuing them, starting from 1st April 2025. Earlier, on 9th September 2024, the GST Council suggested starting e-invoicing for B2C transactions in phases. So far, e-invoicing has only been required for B2B transactions for businesses with a turnover above Rs. 5 crores. Additionally, from 15th July 2023, two-factor authentication became mandatory for businesses with a turnover over Rs. 100 crores for both e-invoicing and e-way bill systems.
Who Must Generate e-Invoice and Applicability Criteria?
e-Invoicing applies to specific categories of businesses based on their turnover. The government has mentioned clear guidelines regarding who must comply:
Applicability:
Businesses with an AATO exceeding Rs. 5 crores in any financial year from 2017-18 onwards must generate e-invoices for B2B transactions, exports, and supplies to SEZs.
Exemptions:
Certain categories, such as banking companies, insurance firms, GTA (Goods Transport Agencies), and SEZ units, are currently exempted from e-invoicing requirements.
Benefits of e-Invoicing to Businesses
The following are the benefits of generating e-Invoicing under GST to Business:
1. Reduces Data Reconciliation Errors: Minimizes mismatches in GST returns.
2. Enhances Interoperability: Standardized format reduces errors and makes data entry easier.
3. Real-Time Invoice Tracking: Businesses can track invoices as soon as they are generated.
4. Automates GST Returns: Details flow directly to GSTR-1, easing compliance.
5. Accelerates Input Tax Credit (ITC): ITC becomes available faster, aiding cash flow.
6. Reduces Tax Audits: Automated records lower the likelihood of audits.
7. Facilitates Invoice Discounting: Helps small businesses access credit more efficiently.
Turnover Criteria and Phases of Implementation
The rollout of e-Invoicing has been done in phases, based on a business’s turnover. Here is a list of different phases:

Phase

Applicable Turnover

Date of Implementation

Notification Number

More than Rs. 500 crores

1st October 2020

61/2020 – Central Tax

More than Rs. 100 crores

1st January 2021

88/2020 – Central Tax

More than Rs. 50 crores

1st April 2021

5/2021 – Central Tax

More than Rs. 20 crores

1st April 2022

1/2022 – Central Tax

More than Rs. 10 crores

1st October 2022

17/2022 – Central Tax

More than Rs. 5 crores

1st August 2023

10/2023 – Central Tax

Businesses must adhere to these rules if their AATO exceeds the specified threshold at any time from FY 2017-18 onwards.
Examples to Understand e-Invoice Applicability
Let’s know the applicability of e-Invoicing under GST through examples:
Example 1:
 ABC Ltd has had the following annual aggregate turnover:

FY 2017-18: Rs. 15 crores

FY 2018-19: Rs. 17 crores

FY 2019-20: Rs. 24 crores

FY 2020-21: Rs. 19 crores

FY 2021-22: Rs. 18 crores

Since XYZ Ltd crossed the turnover limit of Rs. 20 crores in FY 2019-20, it must generate e-invoices from 1st April 2022 onwards.
Example 2:
 QPR Ltd started operations in FY 2019-20, and its turnover was:

FY 2019-20: Rs. 4 crores

FY 2020-21: Rs. 7 crores

FY 2021-22: Rs. 11 crores

OPQ Ltd crossed the Rs. 10 crores limit in FY 2021-22, so it must comply with e-Invoicing from 1st October 2022.
Transactions and Documents Covered Under e-Invoicing under GST
e-Invoicing under GST applies to several types of transactions and documents:

Document Type

Transaction Type

Tax Invoices

B2B sales, exports, SEZ supplies, deemed exports

Credit Notes

Amendments or corrections to B2B sales

Debit Notes

Additional charges or corrections to B2B sales

Supplies Under RCM

Reverse Charge Mechanism transactions

Business-to-Government

Supplies to government agencies

e-Invoicing does not apply to Business-to-Consumer (B2C) transactions, non-taxable supplies, imports, or high-sea sales.
Exemptions from e-Invoicing
Certain categories of businesses are exempt from e-Invoicing, regardless of their turnover. These exemptions are outlined under CBIC Notification No. 13/2020 – Central Tax. The following entities are currently exempt:
Notified Exemptions:
1. Banking Companies & NBFCs: Financial institutions, including NBFCs.
2. Goods Transport Agencies (GTA): Companies that supply transport services.
3. Passenger Transport Services: Businesses that provide passenger transportation.
4. Multiplex Operators: For admission services to multiplexes.
5. SEZ Units: Exempt unless specified otherwise.
6. Government Departments: Local authorities are excluded.
7. OIDAR Services: Those registered under Rule 14 of the CGST Rules. 
These entities can still generate delivery challans and bills of supply but are not mandated to generate e-invoices.
Transition from Manual to e-Invoicing under GST
Before e-invoicing, businesses manually generated invoices using ERP software and uploaded details to the GSTR-1 return. The e-way bills were created separately, often requiring multiple steps.
Before e-Invoicing:

Invoice details were manually uploaded to GSTR-1.

e-Way bills were generated separately using imported data from ERP.

After e-Invoicing:

Invoices are integrated into the IRP.

Automatic data sharing between IRP, GST portal, and e-way bill system.

Simplifies tax filing and reduces errors.

Time Limit to Generate e-Invoice
There were no strict timelines for generating e-invoices until 30th April 2023. From 1st May 2023, the government introduced a requirement for businesses with an AATO of Rs. 100 crore or more to generate e-invoices within 7 days, but this was not implemented.
Updated Rule:
Starting 1st November 2023, businesses with AATO over Rs. 100 crore must report tax invoices within 30 days. This rule extends to businesses with AATO above Rs. 10 crore from 1st April 2025.
Mandatory Fields Required in e-Invoicing
An e-invoice must adhere to certain mandatory fields as per GST rules:

Field

Description

Document Type Code

Specifies INV/CRN/DBN

Supplier Legal Name

Must match PAN records

Supplier GSTIN

15-digit alphanumeric GSTIN

Invoice Number

Sequential and unique within a business context

Invoice Date

Date format: YYYY-MM-DD

Recipient’s Legal Name

Name of the buyer as per PAN

Recipient GSTIN

GSTIN of the buyer

HSN Code

8-digit code for goods/services

Item Description

Specific to the trade/industry

Total Invoice Value

Final amount, rounded to two decimals

Note: Additional fields like the IRN and QR code are added post-authentication by the IRP. 
Process of Generating an e-Invoice Online
Here is a step-by-step guide to generate an e-invoice:
Step 1: Reconfigure ERP System
Ensure the ERP system is compatible with PEPPOL (Pan-European Public Procurement Online) standards. Collaborate with your software provider to include mandatory fields as per GST norms.
Step 2: Choose an IRN Generation Method

Direct API Integration: Whitelist your IP or use GST Suvidha Providers (GSP).

Bulk Generation Tool: Download and use JSON files for bulk invoice uploads.

Step 3: Create the Invoice
Generate a standard invoice with all necessary details like GSTIN, item rate, tax amount, and total transaction value.
Step 4: Upload Invoice Data to IRP
Use the chosen method (API, JSON, or GSP) to upload data to the IRP. The IRP verifies and assigns a unique Invoice Reference Number (IRN).
Step 5: Receive Authenticated Invoice
The IRP generates an IRN, digitally signs the invoice, and returns a QR code. The data automatically flows to the GST and e-way bill portals.
Step 6: Print and Use the Invoice
Print the invoice with the QR code for your records. The IRN and QR code validate the e-invoice. 
FAQs
1. What is the main purpose of e-Invoicing under GST? 
Ans. The main purpose is to streamline invoicing, reduce errors, and automate data flow between the GST portal and the e-way bill system, making tax compliance easier.
2. Is e-Invoicing mandatory for all businesses? 
Ans. No, e-Invoicing is only mandatory for businesses with an annual aggregate turnover of more than Rs. 5 crore. Certain sectors like banks and SEZ units are exempt.
3. What happens if an e-Invoice is not generated within the stipulated time? 
Ans. From 1st April 2025, businesses with turnover above Rs. 10 crore must report invoices within 30 days. Failure to comply may render the invoice non-compliant.
4. How does e-Invoicing benefit small businesses? 
Ans. It provides faster access to credit through invoice discounting and reduces manual data entry, making compliance more efficient.
5. Can I generate e-invoices using Excel? 
Ans. Yes, businesses can use an Excel tool to bulk upload invoices in JSON format on the IRP for authentication.
6. Are B2C transactions covered under e-Invoicing? 
Ans. No, e-Invoicing currently applies only to B2B transactions. However, plans are underway for phased implementation for B2C.
7. What fields are mandatory in an e-invoice? 
Ans. Fields like Document Type Code, Supplier GSTIN, Invoice Number, HSN Code, and Total Invoice Value are mandatory.

‘e-Invoicing’ or electronic invoicing is a system introduced by the Government of India to simplify and automate the invoicing process for B2B transactions under the Goods and Services Tax (GST). This system requires businesses to submit their already generated invoices on a designated e-invoice portal, known as the Invoice Registration Portal (IRP). The IRP then validates and authenticates the invoice by generating an Invoice Reference Number (IRN) and a unique QR code.

The main objective of e-Invoicing is to ensure that data between taxpayers and the government is easily integrated and reduces manual errors. The entire process enables real-time data sharing with the GST portal and the e-way bill portal, making it simpler to file GSTR-1 and generate e-way bills without additional manual intervention.

Latest Updates on e-Invoicing under GST

On 5th November 2024, a new advisory from the GSTN portal announced that businesses with an Annual Aggregate Turnover (AATO) of Rs. 10 crore or more will need to report e-invoices on IRP portals within 30 days of issuing them, starting from 1st April 2025. Earlier, on 9th September 2024, the GST Council suggested starting e-invoicing for B2C transactions in phases. So far, e-invoicing has only been required for B2B transactions for businesses with a turnover above Rs. 5 crores. Additionally, from 15th July 2023, two-factor authentication became mandatory for businesses with a turnover over Rs. 100 crores for both e-invoicing and e-way bill systems.

Who Must Generate e-Invoice and Applicability Criteria?

e-Invoicing applies to specific categories of businesses based on their turnover. The government has mentioned clear guidelines regarding who must comply:

Applicability:

Businesses with an AATO exceeding Rs. 5 crores in any financial year from 2017-18 onwards must generate e-invoices for B2B transactions, exports, and supplies to SEZs.

Exemptions:

Certain categories, such as banking companies, insurance firms, GTA (Goods Transport Agencies), and SEZ units, are currently exempted from e-invoicing requirements.

Benefits of e-Invoicing to Businesses

The following are the benefits of generating e-Invoicing under GST to Business:

1. Reduces Data Reconciliation Errors: Minimizes mismatches in GST returns.

2. Enhances Interoperability: Standardized format reduces errors and makes data entry easier.

3. Real-Time Invoice Tracking: Businesses can track invoices as soon as they are generated.

4. Automates GST Returns: Details flow directly to GSTR-1, easing compliance.

5. Accelerates Input Tax Credit (ITC): ITC becomes available faster, aiding cash flow.

6. Reduces Tax Audits: Automated records lower the likelihood of audits.

7. Facilitates Invoice Discounting: Helps small businesses access credit more efficiently.

Turnover Criteria and Phases of Implementation

The rollout of e-Invoicing has been done in phases, based on a business’s turnover. Here is a list of different phases:

Phase	Applicable Turnover	Date of Implementation	Notification Number
1	More than Rs. 500 crores	1st October 2020	61/2020 – Central Tax
2	More than Rs. 100 crores	1st January 2021	88/2020 – Central Tax
3	More than Rs. 50 crores	1st April 2021	5/2021 – Central Tax
4	More than Rs. 20 crores	1st April 2022	1/2022 – Central Tax
5	More than Rs. 10 crores	1st October 2022	17/2022 – Central Tax
6	More than Rs. 5 crores	1st August 2023	10/2023 – Central Tax

Businesses must adhere to these rules if their AATO exceeds the specified threshold at any time from FY 2017-18 onwards.

Examples to Understand e-Invoice Applicability

Let’s know the applicability of e-Invoicing under GST through examples:

Example 1:

ABC Ltd has had the following annual aggregate turnover:

FY 2017-18: Rs. 15 crores
FY 2018-19: Rs. 17 crores
FY 2019-20: Rs. 24 crores
FY 2020-21: Rs. 19 crores
FY 2021-22: Rs. 18 crores

Since XYZ Ltd crossed the turnover limit of Rs. 20 crores in FY 2019-20, it must generate e-invoices from 1st April 2022 onwards.

Example 2:

QPR Ltd started operations in FY 2019-20, and its turnover was:

FY 2019-20: Rs. 4 crores
FY 2020-21: Rs. 7 crores
FY 2021-22: Rs. 11 crores

OPQ Ltd crossed the Rs. 10 crores limit in FY 2021-22, so it must comply with e-Invoicing from 1st October 2022.

Transactions and Documents Covered Under e-Invoicing under GST

e-Invoicing under GST applies to several types of transactions and documents:

Document Type	Transaction Type
Tax Invoices	B2B sales, exports, SEZ supplies, deemed exports
Credit Notes	Amendments or corrections to B2B sales
Debit Notes	Additional charges or corrections to B2B sales
Supplies Under RCM	Reverse Charge Mechanism transactions
Business-to-Government	Supplies to government agencies

e-Invoicing does not apply to Business-to-Consumer (B2C) transactions, non-taxable supplies, imports, or high-sea sales.

Exemptions from e-Invoicing

Certain categories of businesses are exempt from e-Invoicing, regardless of their turnover. These exemptions are outlined under CBIC Notification No. 13/2020 – Central Tax. The following entities are currently exempt:

Notified Exemptions:

1. Banking Companies & NBFCs: Financial institutions, including NBFCs.

2. Goods Transport Agencies (GTA): Companies that supply transport services.

3. Passenger Transport Services: Businesses that provide passenger transportation.

4. Multiplex Operators: For admission services to multiplexes.

5. SEZ Units: Exempt unless specified otherwise.

6. Government Departments: Local authorities are excluded.

7. OIDAR Services: Those registered under Rule 14 of the CGST Rules.

These entities can still generate delivery challans and bills of supply but are not mandated to generate e-invoices.

Transition from Manual to e-Invoicing under GST

Before e-invoicing, businesses manually generated invoices using ERP software and uploaded details to the GSTR-1 return. The e-way bills were created separately, often requiring multiple steps.

Before e-Invoicing:

Invoice details were manually uploaded to GSTR-1.
e-Way bills were generated separately using imported data from ERP.

After e-Invoicing:

Invoices are integrated into the IRP.
Automatic data sharing between IRP, GST portal, and e-way bill system.
Simplifies tax filing and reduces errors.

Time Limit to Generate e-Invoice

There were no strict timelines for generating e-invoices until 30th April 2023. From 1st May 2023, the government introduced a requirement for businesses with an AATO of Rs. 100 crore or more to generate e-invoices within 7 days, but this was not implemented.

Updated Rule:

Starting 1st November 2023, businesses with AATO over Rs. 100 crore must report tax invoices within 30 days. This rule extends to businesses with AATO above Rs. 10 crore from 1st April 2025.

Mandatory Fields Required in e-Invoicing

An e-invoice must adhere to certain mandatory fields as per GST rules:

Field	Description
Document Type Code	Specifies INV/CRN/DBN
Supplier Legal Name	Must match PAN records
Supplier GSTIN	15-digit alphanumeric GSTIN
Invoice Number	Sequential and unique within a business context
Invoice Date	Date format: YYYY-MM-DD
Recipient’s Legal Name	Name of the buyer as per PAN
Recipient GSTIN	GSTIN of the buyer
HSN Code	8-digit code for goods/services
Item Description	Specific to the trade/industry
Total Invoice Value	Final amount, rounded to two decimals

Note: Additional fields like the IRN and QR code are added post-authentication by the IRP.

Process of Generating an e-Invoice Online

Here is a step-by-step guide to generate an e-invoice:

Step 1: Reconfigure ERP System

Ensure the ERP system is compatible with PEPPOL (Pan-European Public Procurement Online) standards. Collaborate with your software provider to include mandatory fields as per GST norms.

Step 2: Choose an IRN Generation Method

Direct API Integration: Whitelist your IP or use GST Suvidha Providers (GSP).
Bulk Generation Tool: Download and use JSON files for bulk invoice uploads.

Step 3: Create the Invoice

Generate a standard invoice with all necessary details like GSTIN, item rate, tax amount, and total transaction value.

Step 4: Upload Invoice Data to IRP

Use the chosen method (API, JSON, or GSP) to upload data to the IRP. The IRP verifies and assigns a unique Invoice Reference Number (IRN).

Step 5: Receive Authenticated Invoice

The IRP generates an IRN, digitally signs the invoice, and returns a QR code. The data automatically flows to the GST and e-way bill portals.

Step 6: Print and Use the Invoice

Print the invoice with the QR code for your records. The IRN and QR code validate the e-invoice.

FAQs

1. What is the main purpose of e-Invoicing under GST?

Ans. The main purpose is to streamline invoicing, reduce errors, and automate data flow between the GST portal and the e-way bill system, making tax compliance easier.

2. Is e-Invoicing mandatory for all businesses?

Ans. No, e-Invoicing is only mandatory for businesses with an annual aggregate turnover of more than Rs. 5 crore. Certain sectors like banks and SEZ units are exempt.

3. What happens if an e-Invoice is not generated within the stipulated time?

Ans. From 1st April 2025, businesses with turnover above Rs. 10 crore must report invoices within 30 days. Failure to comply may render the invoice non-compliant.

4. How does e-Invoicing benefit small businesses?

Ans. It provides faster access to credit through invoice discounting and reduces manual data entry, making compliance more efficient.

5. Can I generate e-invoices using Excel?

Ans. Yes, businesses can use an Excel tool to bulk upload invoices in JSON format on the IRP for authentication.

6. Are B2C transactions covered under e-Invoicing?

Ans. No, e-Invoicing currently applies only to B2B transactions. However, plans are underway for phased implementation for B2C.

7. What fields are mandatory in an e-invoice?

Ans. Fields like Document Type Code, Supplier GSTIN, Invoice Number, HSN Code, and Total Invoice Value are mandatory.