E-invoicing under GST — formally known as Electronic Invoicing — requires eligible registered persons to generate a unique Invoice Reference Number (IRN) for every B2B invoice, debit note, and credit note through the Invoice Registration Portal (IRP). Failure to comply renders the invoice invalid for ITC purposes for the recipient.
Current Applicability Threshold
As of the current financial year, e-invoicing is mandatory for all GST-registered businesses whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds ₹5 crore. This threshold has been progressively reduced since e-invoicing was first introduced at ₹500 crore in October 2020.
Who is Exempt from E-Invoicing?
Notwithstanding the turnover threshold, certain categories are specifically exempt from e-invoicing even if their turnover exceeds the limit:
- Insurance companies, banking companies, and financial institutions (including NBFCs)
- Goods Transport Agencies (GTAs)
- Registered persons supplying passenger transportation services
- Registered persons supplying services by way of admission to exhibition of cinematograph films in multiplex screens
- Special Economic Zone (SEZ) units (exporters from SEZ are exempt, but SEZ developers are not)
How to Generate an IRN
The process of IRN generation follows a standardised flow:
- Step 1: Prepare the invoice in your accounting/ERP software in the prescribed JSON format
- Step 2: Upload the JSON to any of the six authorised IRPs (including the NIC IRP)
- Step 3: The IRP validates the data, generates a unique IRN (64-character hash), digitally signs the invoice, and returns a QR code
- Step 4: The QR code and IRN must be printed on the invoice before it is shared with the recipient
Critical Compliance Points
Several compliance issues frequently arise during department audits and scrutiny:
- IRP cancellation window: An e-invoice can only be cancelled on the IRP within 24 hours of generation. After that, only amendment through credit/debit notes is possible
- GSTR-1 auto-population: IRN-generated invoices are automatically pushed to GSTR-1. Manual editing of these details in GSTR-1 can cause mismatches
- B2C transactions: E-invoicing is not applicable to B2C supplies, but dynamic QR codes are required on B2C invoices above ₹500 for businesses exceeding ₹500 crore turnover
Penalties for Non-Compliance
An invoice issued without a valid IRN (where applicable) is treated as an invalid invoice. The recipient cannot claim ITC on such invoices. The supplier may face a penalty of ₹10,000 per invoice under Section 122 of the CGST Act, or an amount equal to the tax evaded — whichever is higher.
Need Assistance with E-Invoicing Setup?
Kyra Advisors assists businesses with e-invoicing integration, vendor communication, and resolving IRN generation errors. Reach out to our team for a compliance review.
This article is published for general informational purposes only and does not constitute legal or professional advice. The content may include summaries of judicial decisions, statutory provisions, or regulatory updates, which are subject to change. Kyra Advisors makes no warranty as to the accuracy, completeness, or current applicability of the information herein. No advocate-client or consultant-client relationship is created by reading this article. Readers are advised to seek professional GST counsel before acting on any information contained herein.
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