Introduction
The GST regime in India continues to evolve with digital compliance at its core. E-invoicing, once limited to large enterprises, is now expanding to cover smaller and mid-sized businesses as the turnover threshold continues to be reduced. For Chartered Accountants, finance teams, and business owners, understanding the practical challenges of e-invoicing and audit documentation has become crucial in FY 2025–26.
This article highlights the latest updates, common pitfalls, and actionable checklists to help businesses stay compliant while maintaining robust audit and assurance standards.
The Expanding Scope of E-Invoicing
E-invoicing under GST means the electronic authentication of B2B invoices through the Invoice Registration Portal (IRP). Once validated, the invoice receives a unique Invoice Reference Number (IRN) and QR code.
As of April 2025, the e-invoicing requirement has been extended to businesses with aggregate turnover exceeding ₹5 crore in any financial year since 2017–18. This progressive reduction of the threshold—from ₹500 crore initially to ₹5 crore now—signals the government’s intent to make real-time reporting the norm across all business sizes.
Additionally, sector-specific clarifications have been issued for exporters, e-commerce operators, and service-based firms regarding invoice formats and reporting timelines.
Common Pitfalls in E-Invoicing and GST Compliance
1. Duplicate or Missing IRNs
Businesses often generate invoices without IRN authentication or mistakenly upload them twice. Both errors can lead to mismatched data during GST return filing (GSTR-1 and GSTR-3B), resulting in compliance notices or penalties.
2. Incorrect HSN or Tax Classification
Misclassification of goods or services remains a recurring issue. Automated validations in the GSTN system can flag inconsistencies between invoices, returns, and e-way bills.
3. Delayed Uploading and Backdated Invoices
Invoices must be uploaded on the IRP within prescribed timelines. Backdating or bulk uploads at month-end may cause rejection or failure in generating valid IRNs.
4. E-Invoice Cancellation Errors
Many taxpayers fail to cancel an e-invoice within the allowed 24-hour window on the IRP. Once this period lapses, credit notes become the only remedy — complicating reconciliation.
5. Inadequate Record-Keeping
Although the GSTN retains data, businesses must also preserve copies of IRNs, QR codes, and digital confirmations for statutory audit and departmental verification.
6. Integration Gaps Between ERP and GST Portals
Inconsistent data flow between internal systems and the GST network often leads to mismatches in turnover, tax liability, or ITC eligibility.
Checklist for Businesses and Auditors
For Businesses
- Ensure ERP or billing software is integrated with the latest IRP APIs.
- Verify all B2B and export invoices are e-invoice compliant.
- Reconcile GSTR-1, GSTR-3B, and e-way bills monthly.
- Train billing and accounts teams on cancellation protocols.
- Maintain digital audit trails — including IRNs, JSON files, and QR-coded invoices.
For Auditors / CAs
- Check IRN validation during GST audit and statutory audit.
- Verify reconciliation between e-invoice data and returns.
- Review system logs for missed uploads or late submissions.
- Ensure control testing over ERP integration and access rights.
- Maintain audit evidence (JSON files, logs, screenshots) for sampling verification.
Recent Updates & Compliance Enhancements
- New Schema Changes:
The latest schema (Version 1.2) introduces mandatory disclosure of payment terms and delivery details, improving transparency for audit validation. - Sectoral Relaxations:
Certain sectors such as banking, NBFCs, insurance, and passenger transport continue to remain exempt, though they must maintain digital invoices in compatible formats. - Penalties for Non-Compliance:
As per Rule 48(5) of the CGST Rules, a non-e-invoiced invoice is treated as invalid — disallowing input tax credit to the recipient and attracting penalties for the supplier. - Automation Push:
The government is exploring AI-based anomaly detection for fake invoice tracing and data mismatch identification.
Practical Advisory: Preparing for FY 2025–26
Chartered Accountants and finance professionals can play a proactive role by guiding clients through structured digital compliance frameworks.
- Adopt Real-Time Reconciliation Tools: Encourage use of GST software that performs automatic IRN-GSTR sync.
- Implement Document Retention Protocols: Maintain at least six years of e-invoice records in accessible digital formats.
- Conduct Mid-Year Compliance Reviews: Pre-audit checks reduce the risk of penalties during GST or statutory audit.
- Stay Updated on Notifications: Periodic changes in schema, turnover limits, or exemptions should be tracked and communicated to clients.
Conclusion
E-invoicing and digital invoicing are more than just compliance tools — they are transforming the way businesses manage documentation, reporting, and audits. For Chartered Accountants, the challenge lies in bridging operational understanding with assurance requirements.
By combining structured checklists, technology adoption, and continuous client awareness, CAs can help ensure seamless GST compliance and stronger financial governance in FY 2025–26.
