Complete Guide on GST E-Invoicing 2025

The Goods and Services Tax (GST) in India unifies multiple indirect taxes, simplifying the tax structure and enhancing transparency. E-invoicing, a key development, involves generating GST-compliant invoices via a government portal, ensuring real-time reporting, accuracy, and reduced fraud. It streamlines compliance, accelerates GST return filing, and boosts credibility with partners. With ongoing updates and lower turnover thresholds, more businesses must adopt e-invoicing to meet regulatory requirements. In this article, we will learn about GST e invoice, its eligibility and more.

What is E Invoice Under GST?

GST e invoice is a system where Business-to-Business (B2B) invoices and related documents are electronically verified through the GST Network (GSTN). This system was introduced to streamline invoice reporting and reduce manual errors.

Under this mechanism, each invoice is assigned a unique identification number by the Invoice Registration Portal (IRP). Once verified, the invoice details are automatically shared with the GST and e-way bill portals in real-time. This reduces the need for manual data entry and ensures consistency across all GST filings.

Who Must Generate E-Invoices?

Under the latest GST rules, businesses registered under GST must generate e-invoices if their aggregate turnover exceeds Rs 5 crore in any financial year from 2017–18 onwards. This applies to B2B transactions, including exports and certain notified services.

The government has gradually expanded the scope of e-invoicing by lowering the turnover threshold in phases. This step-by-step rollout ensures smoother implementation and broader coverage.

E-invoicing Implementation Timeline

Listed below are the e-invoicing implementation timeline:

These notifications are issued by the Central Board of Indirect Taxes and Customs (CBIC) under the CGST Rules. The turnover includes all taxable, exempt, and export supplies on a PAN India basis.

Documents Applicable for E-Invoicing

E-invoicing applies to the following documents issued under GST:

• Tax Invoice

A registered supplier issues a tax invoice for supplying taxable goods or services. It records key details like GSTIN, invoice number, value, and tax. The buyer uses it to claim input tax credit.

• Credit Note

A credit note reduces the invoice value when goods return, services show issues or excess tax gets charged. The supplier reports it in the return to adjust tax liability and reduce the buyer's credit.

• Debit Note

A debit note increases the invoice value when the original invoice underreports value or tax. It helps the supplier correct errors and adjust tax records in the monthly GST return.

Supplies Applicable for E-Invoicing

E-invoicing applies only to specific types of supplies. It does not cover Business-to-Consumer (B2C) transactions. The supplies on which e invoicing GST is applicable are listed below:

1. Business-to-Business (B2B) Supplies

A supplier issues an e-invoice when selling goods or services to another registered taxpayer. This includes cases where the buyer uses a different GSTIN but operates under the same PAN. The transaction must be reflected in both parties' GST returns.

2. Supplies to SEZ Units or SEZ Developers

Supplies made to Special Economic Zone (SEZ) units or developers fall under e-invoicing rules. These supplies may occur with or without payment of tax, depending on the nature of the authorization. The supplier must report these transactions in GSTR-1.

3. Export Supplies

E-invoicing applies to all goods and services sent outside India. The supplier must issue an e-invoice even when exports attract zero tax under GST. Customs clearance and refund processing requires the invoice reference number (IRN).

4. Deemed Exports

Certain domestic supplies qualify as exports under GST rules, even though the goods do not leave the country. Supplies to an Advance Authorisation holder or Export Promotion Capital Goods (EPCG) license holder fall in this category and require e-invoices.

5. Business-to-Government (B2G) Supplies

When a registered business supplies goods or services to a government department that holds a valid GSTIN and crosses the e-invoicing threshold, e-invoicing becomes mandatory. These transactions follow the same rules as B2B supplies.

6. Supplies Under Reverse Charge Mechanism (RCM)

If a supply falls under the reverse charge list notified in Section 9(3) of the CGST Act, the supplier still issues an e-invoice. The recipient pays the tax directly to the government, but the invoice must be valid and authenticated.

7. Supplies to Distinct Persons

When a company operates in multiple states or union territories and holds separate GSTINs, supplies between these branches are treated as distinct-person transactions. E-invoicing applies to such internal stock transfers or service supplies.

Entities and Documents Exempted from E-Invoicing GST

The entities and documents that are exempted from E-invoicing GST are as follows:

1. Financial Institutions

Banks, insurers, NBFCs, and financial institutions do not follow e-invoice rules. These entities issue large volumes of standardized invoices under strict RBI norms. GST law exempts them to avoid disruption in regulated financial operations.

2. Goods Transport Agencies (GTA)

A GTA transports goods through road freight. It issues a consignment note that includes the vehicle number, route, and shipment details. Since this document integrates with e-way bill data, e-invoicing does not apply to GTAs.

3. Passenger Transport Service Providers

A business that provides passenger transport issues tickets that serve as GST invoices. These tickets already contain fare, tax, and route details. The government exempts them from e-invoicing to maintain existing billing systems.

4. Multiplex Cinemas

Multiplex operators issue admission tickets for movie screenings. These tickets already show GST details and link with digital reporting systems. GST law excludes this category from e-invoice rules to avoid duplication in billing.

5. SEZ Units

A unit located within a Special Economic Zone (SEZ) handles export-focused transactions. The government exempts these units from e-invoicing to support the ease of doing business in export zones. However, SEZ developers must follow e-invoicing if they cross the threshold.

6. Government Departments and Local Authorities

Central, state, and local government bodies do not fall under the e-invoicing mandate. These entities issue regular GST invoices for their supplies. The exemption ensures that administrative operations continue without technical barriers.

7. OIDAR Service Providers

A foreign company that supplies online information or database access services to Indian customers registers under Rule 14 of the CGST Rules. Since these providers operate outside India and supply directly to unregistered users, they do not come under the e-invoicing requirement.

How to Generate a GST e-Invoice?

The steps to generate a GST e-invoice as explained below:

Step 1: Update Your ERP System

A business must update its billing or accounting software. The software must follow the e-invoice format notified under GST. This format includes specific fields such as GSTIN, invoice number, item details, and tax amount. The ERP must align with the standard set by the government, called the e-invoice schema. This ensures each invoice meets GST rules and passes validation without errors.

Step 2: Choose the Method for IRP Generation

The business must choose a method to send invoice data to the Invoice Registration Portal (IRP). There are two main options:

• Direct API Integration: The business connects its ERP to the IRP. This requires whitelisting the system’s IP address on the government portal.
• GST Suvidha Provider (GSP): The business connects to the IRP through a GSP. This allows invoice data to move from the ERP to the IRP without direct integration.
• Bulk Upload Tool: The business can prepare many invoices using a government-approved tool. This tool creates a JSON file. The business uploads this file to the IRP to generate multiple invoice reference numbers (IRNs) at once.

Step 3: Create the Invoice in the ERP

The business must raise a regular tax invoice using its ERP or billing software. The invoice must include the buyer’s and seller’s names, addresses, GSTINs, invoice number, invoice date, description of items, quantity, taxable value, GST rate, and total tax. Every field must match the format defined under the GST rules. This invoice forms the base for the IRN generation.

Step 4: Upload Invoice Details to IRP

The business uploads the invoice to the Invoice Registration Portal using the method selected in Step 2. The portal accepts data in JSON format. The business can send the data through a direct API, through a GSP, or using the upload tool. Each invoice must contain complete and correct details for validation.

Step 5: Validation and IRN Generation by IRP

Once the IRP receives the invoice data, it checks if the details are correct. It confirms whether the invoice number is unique for the seller in the given financial year. After successful validation, the IRP generates a 64-character hash called the Invoice Reference Number (IRN). The IRP also adds a digital signature and creates a QR code. This proves that the invoice is valid under GST.

Step 6: Download the Signed E-Invoice

The IRP returns the digitally signed e-invoice in JSON format. This file contains the IRN, the signed invoice, and the QR code. The business downloads this file into its ERP. The business can now print or share this e-invoice with buyers. The QR code on the invoice allows easy verification at any time.

Step 7: Auto-Population in GST and E-Way Bill Portals

After approval, the IRP sends the invoice data to the GST portal. This data automatically fills the relevant fields in the seller’s GSTR-1 form. If the invoice includes transportation details, the IRP also sends the data to the e-way bill portal. This reduces manual data entry and prevents mismatches in GST returns.

Step 8: Receive Confirmation

The IRP sends a confirmation to the seller. If the seller provides an email address while creating the invoice, the portal sends a confirmation email. This message confirms that the e-invoice is valid and stored in the GST system.

Mandatory Sections of GST e-Invoice

The mandatory sections of the GST e-invoice are explained below in detail:

1. Basic Details

This section outlines the core document identifiers that validate the authenticity of the invoice. The basic details are as follows:

• Document Type Code: Specifies the nature of the document, such as invoice (INV), credit note (CRN), or debit note (DBN). This helps authorities track the type of transaction.
• Document Number: A unique number assigned to the invoice for a specific financial year. It must follow a sequential order for easy reference and audit trail.
• Document Date: The issuance date of the invoice, recorded in DD/MM/YYYY format. This data is crucial for compliance, especially for claiming input tax credits.

2. Supplier Information

The supplier must include the following information in their GST e invoice:

• Supplier Legal Name: The registered name of the supplier, exactly as mentioned on the PAN. This ensures alignment with official tax records.
• Supplier GSTIN: The 15-digit GST number that uniquely identifies the supplier under GST laws.
• Supplier Address: Full postal address of the supplier, including building number, street, locality, and district.
• Supplier Place: City, town, or village of the supplier. This helps determine the point of origin for goods.
• Supplier State Code & Pincode: The state code is selected from a predefined list under GST rules; the pincode ensures geographical accuracy.

3. Recipient Information

This section deals with the buyer or recipient of the goods/services. Listed below are the recipient's information that must be included in the GST e invoice:

• Recipient Legal Name: The legal name of the recipient, matching with PAN records.
• Recipient GSTIN: The recipient’s GST number, required especially in B2B transactions.
• Recipient Address: Complete billing address of the buyer.
• Recipient Place: The city or town of the recipient’s location.
• Recipient State Code & Pincode: Helps define the place of supply, which is essential for tax applicability under IGST, CGST, and SGST.

4. Invoice Item Details

Below are the information that must be included in the invoice item detail section of the GST e invoice:

• Item Description: A clear description of each product or service as used in the trade or industry.
• HSN Code: Harmonized System of Nomenclature code that classifies the item for GST rate determination.
• Quantity and Unit: Number of items and their measurement unit (Nos, Kg, etc.), critical for valuation and stock tracking.
• Item Price: Unit price of the item, excluding GST.
• Assessable Value: The net price of the item after subtracting discounts but before tax.
• GST Rate: Percentage rate of GST applicable on the item.
• IGST/CGST/SGST Value: Specific tax values depending on the nature and location of the transaction.

5. Document Total

Summarises all monetary values of the transaction to present a complete financial picture. Listed below are the information that must be included in this section:

• Total Taxable Value: Total value of all items before GST is added.
• Total Invoice Value: Final invoice value including applicable taxes, rounded to two decimal places.

Time Limit to Generate E-Invoices Under GST

Initially, the GST law did not define any time limit for generating e-invoices. Businesses could issue and upload invoices without facing any deadline. However, to strengthen compliance and reduce tax evasion, the government gradually introduced a phased timeline for reporting invoices on the Invoice Registration Portal (IRP).

Below is the structured breakdown of how the time limit for e-invoice reporting has evolved:

• Until 30th April 2023 – No Time Limit Applicable

There was no specific deadline under GST law for generating or reporting e-invoices. Businesses could report them at any time without restriction.

• 1st May 2023 – Proposed 7-Day Limit (Not Implemented)

The government announced a plan to mandate the generation of e-invoices within 7 days from the invoice date for taxpayers with an Annual Aggregate Turnover (AATO) of Rs 100 crore or more. However, this proposal was never enforced.

• 1st November 2023 – 30-Day Deadline Introduced

A mandatory 30-day time limit was officially enforced for businesses with AATO of Rs 100 crore or more. All tax invoices, credit notes, and debit notes had to be reported to an IRP within 30 days from the date of issue.

• 5th November 2024 – Rule Extended to Rs 10 Crore+ Turnover

As per an advisory on the GSTN portal, the same 30-day time limit was extended to taxpayers with AATO of Rs 10 crore and above. This was announced in advance to provide businesses with adequate preparation time.

• Effective from 1st April 2025 – Implementation for Rs 10 Crore+ Businesses

From this date onward, all businesses with an Annual Aggregate Turnover of Rs 10 crore or more must report all tax invoices, debit notes, and credit notes to an IRP within 30 days of issuance. Failing to do so will render the invoice invalid.

Consequences of Non-Compliance

The consequences of non-compliance are as follows:

1. Penalty for Non-Issuance of E-Invoice

If a registered business does not generate an e-invoice for a transaction that falls under the e-invoicing mandate, it attracts a heavy penalty. The government imposes a penalty of either Rs 10,000 or 100% of the GST payable, whichever is higher. This rule ensures businesses follow the GST system and maintain transparent records.

2. Penalty for Incorrect E-Invoice

If a business issues an e-invoice with missing or incorrect details—such as no QR code, wrong invoice number, or invalid HSN codes—it violates the GST rules. In this case, the government imposes a flat penalty of Rs 25,000 per invoice. Such errors can lead to legal complications and affect the credibility of the business.

3. Detention of Goods During Transit

If a supplier moves goods without a valid e-invoice or QR code, the goods and the transport vehicle face detention under Section 129 of the CGST Act. The tax officer can seize the goods and release them only after payment of the applicable tax and penalty. This leads to delivery delays and financial losses.

4. Inability to Generate E-Way Bills

A valid e-invoice is a precondition to generate e-way bills for B2B transactions. If a supplier fails to generate an e-invoice, the system does not allow the creation of a valid e-way bill. This results in disrupted logistics blocked shipments, and non-compliance with GST rules during transportation.

5. Loss of Input Tax Credit (ITC)

If a buyer receives an invoice without an IRN or receives it after the allowed time limit, the invoice becomes ineligible for claiming Input Tax Credit. As a result, the buyer cannot claim the tax amount paid on the purchase. This affects working capital and leads to financial stress for the buyer.

6. GST Return Mismatch

When a supplier fails to issue a valid e-invoice, the data does not auto-populate in the GSTR-1 form. This causes a mismatch in the buyer’s GSTR-2B form. Due to this, the buyer cannot match the invoice details and must manually reconcile records. This results in delays and errors in monthly return filing.

7. Violation of Upload Timeliness Rule

From 1st April 2025, all taxpayers with an Annual Aggregate Turnover (AATO) of Rs 10 crore or more must report e-invoices within 30 days of the invoice date. If a business uploads the invoice after 30 days, the GST system rejects the invoice. This makes the invoice invalid for Input Tax Credit and legal use.

How E-Invoice System Strengthens GST Compliance

Below is a detailed explanation of how e-invoicing strengthens GST compliance:

1. Enables Real-Time Monitoring

The GST system records each invoice as soon as it is generated through the Invoice Registration Portal (IRP). This gives tax officials instant access to transaction data. Authorities can monitor sales and purchases as they happen, which helps detect fraud before it spreads across the supply chain.

2. Eliminates Invoice Tampering

E-invoices cannot be created or changed manually. The system issues a unique Invoice Reference Number (IRN) and QR code for every invoice, which confirms its authenticity. Once generated, no one can modify the invoice without detection. This ensures that transactions stay transparent and tamper-proof.

3. Blocks Fake ITC Claims

Only invoices registered on the GST portal qualify for Input Tax Credit (ITC). This removes the scope for fake or backdated invoices. Businesses must show valid, system-approved invoices for every ITC claim. This process stops fraudulent claims and protects government revenue.

4. Ensures ITC and Output Tax Match

Each e-invoice links the supplier’s tax details with the buyer’s ITC records. The GST system verifies both sides of the transaction. If the details do not match, the system rejects the ITC. This cross-verification discourages manipulation and enforces accurate tax reporting.

Benefits of E Invoicing GST to Businesses

Below is a list of the benefits of e invoicing GST to businesses:

• Reduces Errors and Ensures Data Accuracy

E-invoicing eliminates manual invoice creation. Each invoice follows a uniform format that the GST system accepts. This ensures that invoice data is always accurate, consistent, and compatible across different accounting tools.

• Auto-populates GST Returns and E-Way Bills

The GST system pulls details from the e-invoice directly into GSTR-1 and the e-way bill form. This removes the need to re-enter data. It helps avoid human errors and shortens the time needed for return preparation and document generation.

• Improves Input Tax Credit (ITC) Flow

Once an e-invoice is uploaded to the portal, it is reflected in the buyer's GSTR-2 B. This ensures that the buyer can claim ITC only on valid and traceable transactions. It helps maintain financial discipline and avoids disputes over credit eligibility.

• Enhances Transparency and Compliance

As soon as the supplier uploads an invoice to the IRP, tax authorities can access it. This real-time visibility removes the chance of backdated or manipulated invoices. It improves compliance and helps businesses avoid scrutiny from tax departments.

• Prevents Fake Invoices and Tax Evasion

Since the invoice must be reported to the GST portal before it becomes valid, the system blocks fake or duplicate invoices. Input tax credit links directly to these verified invoices. This discourages fraudulent claims and improves the credibility of reported tax data.

• Improves Business Credibility and Finance Access

E-invoices create a transparent digital trail of transactions. Lenders and large enterprises trust businesses that follow this system. It becomes easier for smaller firms to access invoice-based financing and build partnerships with larger buyers.

• Supports Real-Time Information Flow

All supply chain participants, including buyers, sellers, and transporters, can access updated invoice information. This supports timely decision-making, improves inventory tracking, and reduces delays in logistics.

• Lowers Compliance Burden and Saves Costs

A single e-invoice fulfils multiple reporting needs. Businesses do not need to prepare different formats for returns, audits, and transport purposes. This reduces compliance work and cuts operating expenses.

• Promotes a Paperless Business Environment

E-invoicing removes the need for physical document storage or movement. This not only saves paper and office space but also speeds up workflows. It aligns with digital India goals and supports eco-friendly practices.

Conclusion

To sum up, understanding GST e-invoice is key to smooth business operations and error-free compliance. E invoicing GST might sound technical, but it makes life easier with faster billing and better record-keeping. If it feels overwhelming, Online Legal India is here to help—guiding you through every step so you can stay focused on growing your business, stress-free.