Running a business in India today means keeping up with constant changes in tax rules. One of the biggest shifts has been the introduction of the e-invoicing system, which applies based on a business’s e-invoicing turnover. Under this system, every business-to-business (B2B) invoice you generate must be electronically validated by the government before it reaches your customer.
Many business owners are still unsure if this rule applies to them or their specific industry. If you fail to follow these norms, you could face serious penalties, and your customers might not be able to claim their tax credit.
This blog post will help clear up the confusion about the current limits, explain who must follow them, and tell you exactly what changes are coming soon.
What is the current e-invoicing turnover limit in India, and who must follow it?
The government has been steadily reducing the yearly GST turnover thresholds to bring more businesses under the e-invoicing regime. As of the latest update, any business with an annual turnover exceeding ₹5 Crore must follow e-invoicing norms.
This rule applies if your turnover crossed this ₹5 Crore limit in any single financial year from 2017-18 onwards. It is mandatory for all your B2B supplies and for exports out of the country. If you fall into this bracket, you must enable this system immediately to avoid stopping your daily sales operations.
What is changing in 2025 for e-invoicing?
Several changes have been introduced related to e-invoicing applicability starting October 1, 2025.
- 30-day e-invoicing upload rule: Businesses with an AATO of ₹10 crore or more must upload their e-invoices to the IRP within 30 days of the invoice date (effective from April 1, 2025), after which the system will reject them. Any delayed reporting may result in invoice invalidation, affecting the buyer’s ability to claim Input Tax Credit (ITC).
- Lowering the turnover threshold: The required limit is proposed to go down from ₹5 crore to ₹2 crore to cover a lot more small businesses. However, this is yet to be implemented.
- Shorter reporting window: The duration for submitting the report has been proposed (yet to be implemented) to be reduced, allowing you three days to invoice the IRP.
- Strict data validation: This means that the IRP will check your GSTIN, HSN codes, and invoice values much more carefully before accepting them.
- More information on the QR code: The QR code on your e-invoice will have more information, like the place where the goods were delivered and the status of your payment, so that checks can be done more quickly.
- Tough penalties: If you don't follow the rules in this new system, you could be fined up to ₹25,000 per invoice.
Who is exempt from e-invoicing?
The government has given relief to some specific sectors even if their turnover is higher than the limit. If you run a unit in a Special Economic Zone (SEZ), you do not need to follow these mandatory procedures right now.
Financial institutions and insurance providers are also exempt from generating IRNs for their transactions. Goods Transport Agencies (GTA) and passenger transport services are excluded to keep their operations simple. Also, if you run a registered multiplex cinema, you are exempt from issuing e-invoices for tickets.
Who needs to comply with the e-invoicing turnover limit, and from when?
It helps to look at the history of these limits to see how fast the government is moving. The system started with huge companies and has rapidly moved to cover small businesses.
- Phase 1 (1st October 2020): It started with large companies having a turnover of more than ₹500 Crore.
- Phase 2 (1st January 2021): The limit was reduced to include businesses with a turnover of over ₹100 Crore.
- Phase 3 (1st April 2021): The net got wider to cover businesses with a turnover above ₹50 Crore.
- Phase 4 (1st April 2022): It became mandatory for companies with a turnover of more than ₹20 Crore.
- Phase 5 (1st October 2022): The limit was lowered again to include businesses with a turnover of over ₹10 Crore.
- Phase 6 (1st August 2023): The current phase covers all businesses with an annual turnover of more than ₹5 Crore.
Penalties for non-compliance
Ignoring these rules is a dangerous financial risk that can lead to heavy fines for your business. If you do not generate an e-invoice when required, you can be fined 100% of the tax amount due or ₹10,000, whichever is higher.
The penalty for issuing an incorrect invoice can go up to ₹25,000 per instance. Most importantly, your customers cannot claim Input Tax Credit if your invoice does not have a valid IRN. This will damage your business relationships and might cause you to lose good clients permanently.
How does TallyPrime help you comply with the e-invoicing turnover limit in India?
TallyPrime acts as a simple bridge between your business books and the government portal, making compliance easy.
- The software lets you make compliant e-invoices automatically, so you don't have to enter any information by hand.
- TallyPrime will check your information for mistakes that could cause the portal to reject your invoice in real time.
- Creating e-way bills and e-invoices is a simple process that can be completed easily with TallyPrime.
- TallyPrime lets you make e-invoices for either a single bill or a bunch of bills at once.
- You get simple reports that let you know right away what's going on with your e-invoicing, so you stay in charge.
Conclusion
As 2026 arrives, e-invoicing is expected to become more popular. If you stay above these turnover limits, your business will be able to keep going without any legal problems. Instead of waiting for a notice, it is smart to start using a trustworthy piece of software right away. This hard rule can become a simple part of your daily work if you use TallyPrime.
