What e-invoicing actually is
E-invoicing does not mean creating invoices on a government website. You still raise the invoice in your own software. The difference is that, before it is valid, the invoice data is reported to an Invoice Registration Portal (IRP), which checks it and sends back a unique Invoice Reference Number (IRN) and a digitally signed QR code.
The IRN and QR code are then printed on the invoice you give the customer. The same data flows on to the GST system, so your GSTR-1 is pre-filled with the invoices you registered, and an e-way bill can be generated from the IRN without typing the details again.
Who has to do it
E-invoicing applies to a registered business whose aggregate turnover has crossed the notified threshold in any financial year since 2017-18. That threshold is currently ₹5 crore, but it has been lowered several times, so check the current limit on the e-invoice portal.
Some sectors are exempt regardless of turnover, including banks and other financial institutions, insurers and units in Special Economic Zones. If you are unsure, your GST practitioner can confirm whether you are covered.
Which documents are covered
| Document | Needs an IRN? |
|---|---|
| Tax invoice to a registered business (B2B) | Yes |
| Export invoice | Yes |
| Credit note or debit note to a registered business | Yes |
| Invoice to a consumer or unregistered buyer (B2C) | No |
| Delivery challan, proforma invoice, quotation | No |
The flow, step by step
- You raise the invoice in your billing or ERP software as usual.
- The software sends the invoice data to the IRP in the government’s standard format.
- The IRP validates it and returns the IRN, an acknowledgement number and date, and a signed QR code.
- The software prints the IRN and QR code on the invoice, and the data is passed on to the GST system and, where needed, the e-way bill system.
Cancelling and correcting an e-invoice
An IRN can be cancelled on the IRP within 24 hours of generation, and only as a whole: you cannot cancel part of an invoice. Once the 24 hours have passed, the invoice can no longer be cancelled there, and the correction is made with a credit note (or a debit note), which is itself registered.
This rule is the reason e-invoicing changes billing habits. The old practice of tearing up a wrong bill and writing a new one with the same number no longer works, because the number has already been registered.
Common mistakes
- Crossing the threshold and continuing to issue unregistered B2B invoices. Such an invoice is not treated as a valid tax invoice, which can put the buyer’s input tax credit at risk.
- Wrong GSTIN, HSN or state codes in the masters, so the IRP rejects the invoice at the moment of billing.
- Reusing an invoice number after a cancellation. A cancelled IRN’s invoice number cannot be registered again.
- Leaving the registration for later. Larger taxpayers now face a time limit for reporting invoices to the IRP, so check the current rule for your turnover.
In short
- E-invoicing means registering each B2B invoice on the Invoice Registration Portal to get an IRN and signed QR code.
- It applies once aggregate turnover crosses the notified threshold, currently ₹5 crore, with some sectors exempt.
- B2B invoices, exports, and credit and debit notes need an IRN; B2C invoices and challans do not.
- An IRN can be cancelled only within 24 hours; after that the correction is a credit or debit note.