E-invoicing has become a key pillar of India’s GST compliance framework, aimed at improving transparency, reducing tax evasion, and streamlining return filing. With the government steadily lowering the turnover threshold, e-invoicing now applies to a much wider set of businesses than before. As a result, understanding who needs to comply, who is exempt and how e-invoicing works in practice is essential for GST-registered taxpayers.
This blog explains the e-invoicing threshold limits in India, outlines exemptions, highlights the benefits for businesses, and walks you through the step-by-step process of generating an e-invoice on the IRP portal, helping you stay compliant and prepared.
E-invoicing threshold limit in India
E-invoicing applicability in India is determined based on a taxpayer’s aggregate annual turnover (AATO)* in a financial year. The government has introduced e-invoicing in a phased manner, gradually reducing the threshold from ₹500 crore in October 2020 to ₹5 crore with effect from 1 August 2023. If your aggregate turnover exceeds the prescribed limit in any financial year, you are required to comply with e-invoicing provisions.
It is important to note that if your turnover was below the threshold in the previous financial year but exceeds it during the current year, e-invoicing becomes mandatory from the beginning of the next financial year. For instance, if your AATO crosses the applicable limit in FY 2024–25, e-invoicing will apply from FY 2025–26 onwards.
*Your AATO will include the turnover for all the GSTINs under a single PAN across India.
Who is exempt from e-invoicing?
Certain registered persons and transactions are exempt from e-invoicing, irrespective of turnover, as notified by the CBIC and amended from time to time. These exemptions currently include the following:
Exempt categories of registered persons
- Insurers, banking companies and financial institutions, including NBFCs
- Goods Transport Agencies (GTAs)
- Registered persons supplying passenger transportation services
- Businesses providing admission services for movie screenings in multiplexes
- Special Economic Zone (SEZ) units
- Government departments and local authorities
- Persons registered under Rule 14 of the CGST Rules (OIDAR service providers)
Documents not covered under e-invoicing
- Delivery challans
- Bills of supply
- Financial or commercial credit notes and debit notes
- Bills of entry
- Input Service Distributor (ISD) invoices
Transactions exempt from e-invoicing
- Business-to-Consumer (B2C) supplies
- Nil-rated, non-taxable or exempt B2B and B2G supplies
- Imports, high sea sales and bonded warehouse sales
- Supplies through Free Trade & Warehousing Zones (FTWZ)
- Transactions subject to reverse charge under Section 9(4) of the CGST Act
What are the benefits of e-invoicing to businesses?
Below are some of the key benefits of e-invoicing to businesses:
- Improves data accuracy through real-time invoice validation on the Invoice Registration Portal
- Reduces invoice errors, duplications and rejections
- Ensures standardised invoicing across all GST-registered businesses
- Enables seamless auto-population of GST returns
- Simplifies e-way bill generation by integrating invoice data
- Enhances operational efficiency through automation of invoicing processes
- Lowers compliance and administrative costs
- Strengthens audit readiness with a clear digital trail
- Minimises the risk of GST disputes and penalties
- Supports faster and more reliable business transactions
What is the process of generating an e-invoice on the IRP portal?
Generating an e-invoice on the Invoice Registration Portal (IRP) involves several structured steps to ensure compliance and smooth integration with GST systems:
Prepare your ERP system: Configure your ERP or e-invoicing software according to PEPPOL standards. Collaborate with your software provider to incorporate the e-invoice schema and mandatory fields, ensuring your invoice template meets CBIC requirements.
Choose a method for IRN generation: You can whitelist your system’s IP for direct API integration, use a GST Suvidha Provider (GSP) or upload invoices in bulk using the IRP bulk generation tool. The tool requires a JSON file format and works efficiently with most invoice generators.
Create the invoice: Raise invoices in your ERP with mandatory details such as supplier GSTIN, billing address, transaction value, item rates, applicable GST and tax amount.
Upload invoice details: Submit invoice data to the IRP via JSON upload, app/GSP, direct API or mobile/SMS options.
IRP validation and IRN generation: The IRP validates invoice details, checks for duplicates, and generates an Invoice Reference Number (IRN) using seller GSTIN, invoice number, financial year and document type. It digitally signs the invoice, generates a QR code and returns a JSON output file to the supplier.
Notification and GST integration: The supplier receives a notification of the e-invoice generation. The IRP sends the authenticated payload to the GST portal for auto-population of GSTR-1 and where applicable, the e-way bill portal.
Conclusion
E-invoicing is now a core GST requirement, and understanding its applicability, exemptions and generation process is essential for smooth compliance. With increasing regulatory scrutiny, relying on manual processes can lead to errors and delays. Using robust e-invoicing software like TallyPrime simplifies e-invoicing by enabling seamless invoice creation, IRN generation and other GST-related benefits from a single platform. By adopting the right solution, businesses can ensure compliance, reduce effort and focus on running operations efficiently.
