The e-invoicing regime under the Goods and Services Tax (GST) framework in India has seen progressive expansion since its introduction. Initially aimed at large enterprises, it has gradually been extended to include mid-sized and now smaller businesses. As of 2025, many businesses that were previously exempt are now expected to onboard the e-invoicing system, with the government signaling a further reduction in the turnover threshold.
For businesses and professionals alike, understanding the latest applicability rules, compliance requirements, penalties for non-adherence, and how best to implement the system is essential. This blog provides a comprehensive guide on e-invoicing rules applicable in 2025, helping businesses prepare efficiently.
What is E-Invoicing?
E-invoicing, or electronic invoicing, refers to the submission of B2B invoices on the government’s Invoice Registration Portal (IRP), where each invoice is authenticated and assigned a unique Invoice Reference Number (IRN) and QR code. This system ensures real-time tracking of transactions, curbs tax evasion, and streamlines GST return filing.
It’s important to note that e-invoicing does not mean creating invoices on the GST portal; instead, businesses must generate them through their own accounting systems and report them to the IRP electronically.
Applicability of E-Invoicing in 2025
As of the latest notifications (subject to future amendments), e-invoicing is mandatory for businesses whose aggregate turnover in any financial year from 2017-18 onwards exceeds ₹5 crore. However, industry observers anticipate that the threshold may be further reduced, possibly to ₹1 crore or even lower, to bring more businesses under the ambit of digital compliance.
Who must comply:
- Registered persons with B2B supplies exceeding the notified turnover threshold.
- Exporters, as e-invoices are also required for zero-rated supplies.
- SEZ units (excluding SEZ developers) that meet the turnover criterion.
Exemptions from e-invoicing:
- Special Economic Zone developers.
- Insurance companies, banks, financial institutions, and NBFCs.
- Goods transport agencies supplying services.
- Government departments and local authorities.
Businesses should monitor CBIC notifications regularly to ensure timely compliance with updated thresholds or exemptions.
How to Generate E-Invoices and IRNs
The process of generating e-invoices involves the following steps:
- Invoice Creation: Generate the invoice in your ERP/accounting system in the prescribed format (JSON).
- IRP Upload: Upload the invoice JSON to the Invoice Registration Portal (IRP) through API integration, GSP tools, or manually via the e-invoice portal.
- IRN Generation: The IRP validates the invoice and assigns a unique Invoice Reference Number (IRN), digitally signs it, and returns a QR code.
- Invoice Delivery: The system-integrated invoice, now bearing the IRN and QR code, is issued to the recipient and used for further GST compliance.
Taxpayers are advised to integrate their billing software with the IRP for seamless generation and auto-reporting of invoices to the GST system.
Integration with Accounting and ERP Systems
Smooth implementation of e-invoicing hinges on the integration of ERP or accounting software with the e-invoice portal. Many popular platforms such as Tally, Zoho Books, QuickBooks, and SAP offer e-invoicing modules that:
- Generate invoice JSON in the required schema.
- Auto-upload invoices to the IRP.
- Fetch IRN and embed QR codes automatically.
Businesses must ensure that their systems are updated to support:
- E-invoice schema version compatibility.
- GSTN validation logic.
- Real-time or batch IRP submission.
Periodic testing in the sandbox environment is recommended before live implementation, especially for businesses new to the system.
Penalties for Non-Compliance
Failure to comply with e-invoicing requirements can result in significant consequences under the GST law:
- Invalid Invoice: Any invoice that should have been e-invoiced but is not reported to the IRP will be treated as invalid for GST purposes. This can lead to denial of Input Tax Credit (ITC) to recipients.
- Penalty under Section 122: A penalty of ₹10,000 per invoice (or 100% of the tax due, whichever is higher) may be imposed for issuing an invoice without IRN and QR code.
- Operational Disruptions: Non-compliant invoices may not be accepted by customers, leading to payment delays or legal disputes.
Hence, businesses must have controls in place to ensure that every applicable invoice is reported to the IRP and carries a valid IRN.
Best Practices for E-Invoicing Implementation
To ensure hassle-free adoption and sustained compliance, businesses should follow these best practices:
- Assess Applicability Proactively: Don’t wait until the turnover threshold applies—prepare in advance based on projected figures.
- Train Finance Teams: Employees handling invoicing should be well-versed with e-invoicing processes, portals, and software functionalities.
- Ensure System Readiness: Upgrade your accounting software and establish API connections with IRP/GSPs well before the compliance date.
- Monitor Error Reports: Use the IRP response to identify and rectify data errors, such as invalid GSTINs or missing details.
- Implement Internal Controls: Set up SOPs and approval workflows to prevent duplication or accidental omission of e-invoices.
- Reconcile Regularly: Cross-check e-invoice data with GSTR-1 returns and books of accounts to ensure consistency and completeness.
Engaging a Chartered Accountant or a GST consultant during implementation can help bridge technical gaps and ensure full compliance with evolving rules.
Final Thoughts
The e-invoicing system is a significant step towards enhancing transparency, standardization, and efficiency in tax compliance. With the potential lowering of turnover thresholds in 2025, more businesses will come under its ambit, and early preparedness will be a competitive advantage.
Rather than viewing it as a regulatory burden, businesses can leverage e-invoicing to streamline operations, reduce manual errors, and ensure real-time tax compliance. By adopting best practices and staying updated with regulatory changes, businesses can turn compliance into an opportunity for better financial management and digital transformation.
