E-Invoice
A digitally signed invoice uploaded to the government portal for real-time GST verification.
E-Invoice (Electronic Invoice) is a system where B2B invoices are authenticated electronically by GSTN (Goods and Services Tax Network) before being issued to the buyer. Unlike E-Way Bill (for goods movement), E-Invoice is for transaction reporting—ensuring tax authorities have real-time invoice data to prevent tax evasion. Mandatory for larger businesses since October 2020, threshold progressively reduced.
Current Applicability (as of 2024-25)
- Mandatory: Businesses with annual turnover ≥ ₹5 crores (from April 2023)
- Voluntary: Smaller businesses can opt-in
- Transactions covered: B2B, B2G, exports (NOT B2C retail invoices like selling to walk-in customers)
How E-Invoicing Works (Step-by-Step)
Step 1: Generate Invoice JSON
Business accounting software/ERP creates invoice in standardized JSON format with mandatory fields (seller/buyer GSTIN, item details, HSN, tax amounts, etc.)
Step 2: Upload to IRP (Invoice Registration Portal)
JSON file uploaded to government's Invoice Registration Portal (IRP). Multiple IRP providers: NIC, GSTN, private ASPs.
Step 3: Validation & IRN Generation
IRP validates data (GSTIN format, HSN code validity, tax calculations). If valid, generates unique IRN (Invoice Reference Number) - 64-character hash. Also generates digitally signed QR code containing key invoice details.
Step 4: Return to Business System
IRP returns: Invoice with IRN, QR code, digitally signed. This becomes the legally valid invoice.
Step 5: Issue to Buyer
PDF invoice with IRN and QR code emailed/printed and given to buyer. QR code allows instant validation by scanning.
Background Auto-reporting:
IRP simultaneously pushes invoice details to GST portal (automatically appears in seller's GSTR-1 and buyer's GSTR-2B), E-Way Bill system (if applicable), and sometimes even buyer's accounting system (if integrated). Eliminates manual data entry errors and mismatches.
Key Benefits
For Businesses:
- Auto-population of GST returns: Invoice data auto-flows to GSTR-1, reducing manual filing effort
- Faster input credit: Buyers see invoices in their GSTR-2B immediately, can claim ITC faster
- Reduced errors: System validates calculations, HSN codes, GSTIN formats before accepting
- E-Way Bill integration: If E-Way Bill needed, pre-filled from E-Invoice data (just add vehicle number)
- Digital record-keeping: Central repository of all validated invoices
For Tax Authorities:
- Real-time visibility into business transactions
- Reduced tax evasion (harder to create fake invoices for claiming false ITC)
- Data analytics to detect suspicious patterns
Mandatory Fields in E-Invoice
- Supplier Details: GSTIN, legal name, address
- Buyer Details: GSTIN, legal name, address, PIN code, state code
- Invoice Details: Invoice number, date, type (Regular/Credit Note/Debit Note)
- Item Details: Description, HSN code (min 4/6 digits based on turnover), quantity, unit, rate
- Tax Details: Taxable value, CGST/SGST/IGST amounts, cess if applicable
- Total Values: Invoice value, TDS/TCS if applicable
Common Issues & Solutions
Issue 1: Buyer's GSTIN Invalid/Cancelled
IRP rejects if buyer GSTIN not active on GST portal. Verify buyer GSTIN before invoicing using GST portal's "Search Taxpayer" function.
Issue 2: IRN Already Generated (Duplicate)
IRN is based on invoice number + financial year + GSTIN. If same invoice number already used, system rejects. Solution: Use unique invoice numbering sequence that never repeats.
Issue 3: HSN Code Mismatch
If HSN code doesn't match product description category, validation fails. Use correct HSN codes, maintain master list.
Issue 4: IRP Portal Down/Slow
During peak hours (month-end, return filing deadlines), IRP can be slow or timeout. Generate E-Invoices throughout the month, not just last few days.
Cancelling E-Invoice
E-Invoice can be cancelled within 24 hours of IRN generation (earlier was 48 hours). After cancellation, IRN becomes invalid. Cannot reuse cancelled invoice number—must issue fresh invoice with new number and generate new IRN. Cancellation pushes credit note data to GST portal automatically.
E-Invoice for Exports
Export invoices also require E-Invoicing. Select "Export" as document type, provide port code, shipping bill details. Foreign buyer may not have GST number—use URP (Unique Recipient Code) or special GSTIN format for foreign entities.
Exemptions from E-Invoicing
- Businesses below turnover threshold (currently <₹5 crores)
- Special Economic Zones (SEZs)
- Specific sectors exempted by notification (insurance, banking, passenger transport, cinema halls, etc.)
Penalties for Non-Compliance
No specific penalty mentioned for not using E-Invoice, but:
- Invoices without IRN considered non-compliant under GST law
- Buyer may not receive invoice in their GSTR-2B, causing ITC claiming issues
- During audits/inspections, absence of E-Invoicing (when mandatory) can lead to penalties under GST Act Section 125 (up to ₹25,000)
Getting Started with E-Invoicing
- Check turnover: If FY annual turnover ≥₹5 crores, E-Invoice mandatory
- Register on IRP: Visit any IRP provider website ( e.g., einvoice1.gst.gov.in), login with GST credentials
- Upgrade accounting software: Ensure ERP/billing software supports E-Invoice JSON generation and IRP API integration
- Test in sandbox: Most IRP providers offer sandbox environment for testing before going live
- Train team: Accounts team must understand IRN generation process, error handling, cancellation procedures
- Go live: Start generating E-Invoices for all applicable transactions (give buffer time before compliance deadline)
E-Invoice + E-Way Bill Integration
For transactions requiring both E-Invoice (value reporting) and E-Way Bill (goods movement), workflow is:
- Generate E-Invoice first (get IRN)
- Use "Generate E-Way Bill using IRN" option on E-Way Bill portal
- System auto-fills Part A from E-Invoice data
- Just add vehicle number (Part B) and generate E-Way Bill
Saves massive duplication of data entry!
How Karygar Simplifies E-Invoicing
Karygar generates E-Invoice-compliant JSON automatically from invoice data with built-in validation checks. Integrated API with IRP providers generates IRN with one click. QR code and digital signature embedded into PDF invoice template. System maintains IRN register, tracks cancellation window (24 hours), and seamlessly creates E-Way Bills from E-Invoice data when needed, ensuring full GST compliance without manual intervention.
See E-Invoice in Action
Don't just read about E-Invoice. See how Karygar automates this process to reduce manual work and errors on your factory floor.