What is E-Invoicing Under GST? Who Needs It and How It Works

E-Invoicing: From Large Corporations to Mid-Size Businesses

When e-invoicing was introduced in India in October 2020, it applied only to businesses with turnover above ₹500 crore. The threshold has been progressively lowered:

Today, any business registered under GST with aggregate annual turnover exceeding ₹5 crore must generate e-invoices for all B2B (business-to-business) transactions. This covers millions of businesses across India — including thousands of manufacturers, traders, and service providers in Coimbatore.

What Exactly Is an E-Invoice?

An e-invoice is not just a PDF or a digitally created invoice. It's a specific machine-readable JSON format that is:

• Created in the seller's billing software
• Reported to the Invoice Registration Portal (IRP)
• Authenticated by the IRP, which generates a unique IRN (Invoice Reference Number)
• Returned with a QR code to be printed on the invoice

Without the IRN and QR code, an invoice does not qualify as an e-invoice under GST law — even if it was created digitally.

Which Transactions Require E-Invoice?

Mandatory:

• B2B supplies (goods or services to registered GST entities)
• Exports (with or without payment of IGST)
• Supplies to SEZ units
• Deemed exports

NOT mandatory:

• B2C supplies (to unregistered buyers)
• Nil-rated or exempt supplies
• Supplies by banks, NBFCs, insurance companies
• Transport services (GTA)
• Passenger transport services

How E-Invoice Works: The Complete Flow

Step 1: Create Invoice in Billing Software

Generate the invoice in Tally Prime, Zoho Books, or any IRP-integrated software. The software formats it as a JSON file per the GST schema.

Step 2: Upload to IRP (Invoice Registration Portal)

The software automatically pushes the JSON to einvoice1.gst.gov.in or any of the 5 authorised IRPs (GSTN, ClearTax, E&Y, Deloitte, IRIS).

Step 3: IRP Validates and Generates IRN

The IRP:

• Validates the GSTIN of seller and buyer
• Checks for duplicate invoices
• Generates a unique 64-character IRN
• Signs the invoice digitally
• Returns the data with a QR code

Step 4: Print Invoice with QR Code

The final invoice sent to the buyer must include:

• The IRN number
• The QR code (verifiable by any QR scanner)
• Acknowledgement number and date

Step 5: Auto-Population in GSTR-1

All e-invoiced transactions are automatically populated in GSTR-1 — reducing manual data entry for the return filer.

Cancellation Rules

An e-invoice can be cancelled within 24 hours of generation on the IRP portal. After 24 hours, it cannot be cancelled on the IRP — but can be amended in GSTR-1 through amendment provisions.

Penalties for Non-Compliance

• Not generating e-invoice: Penalty of ₹10,000 per invoice
• Incorrect e-invoice details: Can trigger GST notice and demand
• Buyer's risk: Cannot claim ITC on invoices without valid IRN (suppliers may face deregistration)

What Accountants Must Do

• Check eligibility: Verify if the client crosses ₹5 crore turnover threshold
• Configure software: Ensure Tally or billing software is IRP-integrated
• Train billing staff: Everyone who generates invoices must understand e-invoicing
• Monitor cancellations: Track the 24-hour window carefully
• Reconcile with GSTR-1: Verify auto-populated data before filing

At Accountique Freshers Labz, e-invoicing is a dedicated module in our GST Practical Course — with live IRP portal demonstrations and Tally integration exercises that prepare you for this critical compliance requirement.