The GST Council of India approved and implemented the ‘e-invoicing’ or ‘electronic invoicing’ system in a phased manner for reporting business-to-business (B2B) invoices on the GST portal. Initially, there were no standardized formats, so a uniform format was introduced after extensive consultations with industry bodies and the Institute of Chartered Accountants of India (ICAI). Since its rollout, various changes have been introduced to refine the GST e-invoicing system.

Before diving into the details of GST e-invoicing and how it works, let’s first look at the new rules effective from April 1, 2025.

New Rules from April 1, 2025

Mandatory 30-Day Reporting Deadline

From April 1, 2025, businesses with an Annual Aggregate Turnover (AATO) of ₹10 crore and above must report and upload e-invoices to the Invoice Registration Portal (IRP) within 30 days from the date of issue. Previously, this rule applied only to businesses with an AATO exceeding ₹100 crore. The lower threshold means that a much larger number of businesses must now comply with this deadline.

Currently, businesses can upload invoices at any time, leading to delays and discrepancies in Input Tax Credit (ITC) claims and overall tax compliance. With the new rule, the IRP system will not accept invoices beyond the 30-day window, ensuring timely reporting and reducing errors. Late submissions will be rejected automatically, which may result in penalties and financial setbacks.

Compulsory Two-Factor Authentication (2FA)

Starting April 1, 2025, all taxpayers, regardless of their turnover, must use Two-Factor Authentication (2FA) to generate e-invoices and e-way bills. This additional security layer enhances authentication and prevents fraudulent activities.

What is GST e-Invoicing?

GST e-invoicing requires taxpayers to report B2B invoices and export invoices issued to their customers on the government’s e-invoice portal, obtaining a unique Invoice Reference Number (IRN). Contrary to common misconceptions, e-invoicing does not mean that the government generates the invoice itself or that invoices exist only as PDFs. Instead, the system ensures that invoices follow a standardized format and can be electronically exchanged across different platforms.

Chronology of GST e-Invoicing Implementation

• September 20, 2019: The GST Council approved the standard format for e-invoicing during its 37th meeting.
• October 2020: E-invoicing was introduced for taxpayers with an AATO exceeding ₹500 crore.
• January 2021: The threshold was reduced to include taxpayers with an AATO between ₹100 crore and ₹500 crore.
• April 1, 2025: The threshold is further reduced to ₹10 crore, and the 30-day reporting deadline becomes mandatory for all qualifying businesses.

Which Documents Must Be Uploaded?

The following documents need to be uploaded to generate an IRN:

• GST invoices
• Credit notes related to B2B transactions and exports
• Debit notes related to B2B transactions and exports

Which Businesses Are Exempt?

Certain businesses and industries are exempt from e-invoicing requirements, including:

• Special Economic Zone (SEZ) units
• Banking and insurance companies, including Non-Banking Financial Companies (NBFCs)
• Multiplex cinema admissions
• Goods transport agencies (for road transportation of goods)
• Passenger transport services

How Does the E-Invoicing Process Work?

1. Invoice Creation: Businesses generate invoices using their accounting or ERP software.
2. Reporting to IRP: The invoice details are uploaded to the Invoice Registration Portal (IRP).
3. IRN Generation: The IRP validates the invoice, generates a unique Invoice Reference Number (IRN), digitally signs the invoice, and provides a QR code.
4. Invoice Issuance: The validated invoice with the QR code is issued to the buyer. Only invoices with a valid IRN are considered legally valid under GST regulations.

What Are the Benefits of E-Invoicing?

For Businesses:

• Automated GST Compliance: Invoice details automatically populate GST return forms and e-way bills, reducing manual work and errors.
• Cost Savings: Reduces disputes, processing time, and compliance costs as all invoices are digitally stored and validated.
• Improved Payment Cycles: Faster processing results in quicker payments and enhanced cash flow management.
• Standardized Format: Based on global standards (UBL/PEPPOL), enabling better interoperability and machine readability.

For Tax Authorities:

• Prevents Tax Fraud: Real-time invoice reporting reduces tax evasion and fraudulent ITC claims.
• Better Data Accuracy: Ensures accurate and up-to-date tax data, improving audit capabilities and compliance enforcement.

What Tools Are Available for E-Invoicing?

Taxpayers can choose from multiple reporting tools based on their preference:

• API Interface: Enables direct integration with accounting software.
• Mobile App: Allows users to report invoices via smartphones.
• GST e-Invoice Preparing and Printing (GePP) Tool: Web-based tool available in online and offline modes.
• Bulk Upload Tool: Suitable for businesses generating high volumes of invoices.

Conclusion

The new e-invoicing rules from April 1, 2025, bring significant changes, particularly the reduced AATO threshold and the strict 30-day reporting deadline. While these changes aim to improve compliance and streamline GST processes, businesses must proactively upgrade their invoicing systems to avoid penalties and disruptions. Adopting digital solutions and ensuring timely reporting will be crucial to navigating this new compliance landscape successfully.