E-Invoice Under GST: Everything You Need to Know for 2025

E-Invoice Under GST: Everything You Need to Know for 2025

E-Invoicing under GST is a digital invoicing system that requires businesses to report their invoices to a centralized Invoice Registration Portal (IRP) for authentication. This system aims to streamline GST compliance, reduce tax evasion, and improve transparency in business transactions.

This guide covers all you need to know about e-invoicing in 2025, including eligibility, benefits, and the compliance process.

What is E-Invoicing Under GST?

E-invoicing refers to the electronic generation and reporting of business invoices in a standardized format to the GST system. After verification by the IRP, the invoice receives a unique Invoice Reference Number (IRN) and a digitally signed QR code, making it valid for GST purposes.

Objectives of E-Invoicing

1. Simplify GST Compliance
   • Automate reporting and eliminate manual data entry errors.
2. Curb Tax Evasion
   • Enhance transparency by ensuring all invoices are reported to the GST system.
3. Streamline ITC Claims
   • Facilitate seamless Input Tax Credit (ITC) reconciliation for buyers.
4. Improve Invoice Tracking
   • Enable real-time tracking of invoices across supply chains.

Applicability of E-Invoicing in 2025

Who is Required to Comply?

E-invoicing is mandatory for businesses with an annual aggregate turnover of ₹5 crore or more in any financial year from 2017-18 onwards.

Exemptions from E-Invoicing

The following entities are exempt from e-invoicing:

1. SEZ units.
2. Insurance companies.
3. Banking companies.
4. Goods Transport Agencies (GTAs).
5. Non-GST supplies.

Key Components of an E-Invoice

1. Invoice Reference Number (IRN)
   • A unique 64-character alphanumeric code generated for each invoice.
2. QR Code
   • Contains details like GSTINs, invoice number, date, taxable value, and tax amount.
3. Standard Format
   • Invoices must adhere to the e-invoice schema prescribed by the GST Council.
4. Digital Signature
   • IRP digitally signs the e-invoice for authenticity.

How to Generate an E-Invoice

Step 1: Prepare the Invoice

• Generate the invoice in the prescribed JSON format using accounting software or ERP systems integrated with e-invoicing capabilities.

Step 2: Upload to the IRP

• Submit the invoice JSON file to the Invoice Registration Portal (IRP) through APIs or directly.

Step 3: IRP Authentication

• The IRP validates the invoice and assigns an IRN and a QR code.

Step 4: Receive the Signed Invoice

• The validated invoice, along with the IRN and QR code, is returned to the supplier and automatically updated on the GST and e-way bill portals.

Benefits of E-Invoicing

1. Reduced Compliance Burden
   • Eliminates the need for duplicate entries in GST returns and e-way bills.
2. Accurate ITC Claims
   • Ensures accurate input tax credit for buyers due to real-time reporting.
3. Improved Transparency
   • Real-time invoice reporting minimizes tax evasion.
4. Streamlined Audits
   • Digital records simplify audit processes for businesses.
5. Cost Efficiency
   • Reduces paperwork and manual intervention.

Challenges in E-Invoicing

1. Technical Integration
   • Businesses must upgrade ERP systems to support e-invoicing.
2. Small Business Adaptation
   • Smaller enterprises may face challenges in adopting digital tools.
3. Connectivity Issues
   • Internet connectivity issues in remote areas may hinder real-time reporting.
4. Data Security Concerns
   • Safeguarding sensitive invoice data during transmission is critical.

Penalties for Non-Compliance

Failure to comply with e-invoicing regulations can result in:

1. Penalty for Non-Issuance
   • ₹10,000 per invoice under Section 122 of the CGST Act.
2. Penalty for Incorrect Details
   • ₹25,000 for errors in invoice details.
3. Disallowance of ITC
   • Buyers may lose ITC claims for invoices not reported under e-invoicing.

Tips for E-Invoice Compliance

1. Upgrade Software
   • Use GST-compliant accounting or ERP software with e-invoicing capabilities.
2. Train Employees
   • Educate your staff about the e-invoicing process and its importance.
3. Validate Data
   • Ensure accuracy in invoice details before uploading to the IRP.
4. Monitor Updates
   • Stay informed about changes in GST rules or e-invoicing requirements.

FAQs

1. Is e-invoicing mandatory for all businesses?
No, it is mandatory only for businesses with an annual turnover of ₹5 crore or more.

2. Can I generate an e-invoice for B2C transactions?
E-invoicing is currently applicable only for B2B and export transactions.

3. What happens if I issue a manual invoice instead of an e-invoice?
Manual invoices are not valid for GST purposes, and penalties may apply.

4. Can I revise an e-invoice after submission?
Once an e-invoice is generated, changes can only be made using a debit or credit note.

5. How do I check the status of my e-invoice?
Log in to the IRP or GST portal to track the status of your e-invoice.

Conclusion

E-invoicing under GST is a transformative step toward digitizing India’s tax ecosystem. By ensuring compliance with the rules, businesses can benefit from streamlined operations, accurate ITC claims, and reduced audit risks.