e-Invoicing Setup

e-Invoicing does not mean generating invoices electronically. It means reporting each business-to-business invoice to an Invoice Registration Portal, which validates it and returns an Invoice Reference Number and a signed QR code. Only then is it a valid tax invoice.

It applies to registered persons whose aggregate turnover has exceeded ₹5 crore in any financial year since 2017-18. Once you cross, it applies from the start of the following financial year and does not fall away if turnover later declines.

It covers business-to-business supplies, exports and supplies to SEZ. It does not cover business-to-consumer sales. Certain sectors — banks, insurers, goods transport agencies, passenger transport and cinema operators — are exempt.

Once applicable, always applicable

The test is whether aggregate turnover exceeded ₹5 crore in any financial year from 2017-18 onwards. A business that touched ₹5.2 crore in 2022-23 and has done ₹3 crore since is still within e-invoicing. Turnover falling back does not take you out of it.

The thirty-day reporting limit

Taxpayers above the prescribed turnover threshold cannot report an invoice to the IRP more than thirty days after its date. The portal simply rejects it. Businesses that batch their invoicing monthly, or that discover a missed invoice during a quarterly review, find themselves holding a document that can never be validated.

Master data causes most rejections

Invalid customer GSTINs, wrong HSN codes, unit codes that do not match the prescribed list, and tax rates inconsistent with the HSN are the usual causes of failure. Cleaning master data before go-live is what makes the difference between a smooth transition and weeks of daily firefighting.

Twenty-four hours to cancel

An IRN can be cancelled within twenty-four hours of generation, and only in full — there is no partial amendment. After that window, corrections are made through credit and debit notes, which themselves require IRNs. Billing teams need to understand this before they start, not after their first mistake.

It is not optional for the buyer either

Your customers reconcile purchases against GSTR-2B. Invoices without a valid IRN do not appear there, so credit cannot be claimed. Business-to-business customers will refuse the invoice, which makes this a commercial obligation as much as a statutory one.

Reporting is done through the e-invoice portal, with the underlying rules published on the GST portal.

Reconcile IRN-generated invoices against GSTR-1 monthly. Auto-population helps but is not infallible, and a gap between what you reported to the IRP and what appears in your return is a query waiting to be raised.

Watch for failed IRNs. An invoice that failed validation and was never retried is an invoice your customer cannot claim credit on, and it will surface in their reconciliation before it surfaces in yours.

If you approach a lower turnover threshold in future, expect coverage to widen. The threshold has been progressively reduced since 2020, and businesses just below the current limit should plan for it rather than be caught by the next notification.