E-Invoice Generation & Compliance: A Complete Guide

Guide to E-Invoice Generation and Compliance

Generating an e-invoice is a multi-step process that begins with verifying applicability and completing a one-time registration on an authorised Invoice Registration Portal (IRP). The taxpayer then prepares invoice data in their own ERP/accounting system as per the notified schema (FORM GST INV-01) and reports it to the IRP in JSON format. Upon successful validation, the IRP generates a unique Invoice Reference Number (IRN), digitally signs the invoice data, and embeds the IRN into a QR Code, which is returned to the taxpayer. The final invoice, containing this QR code, must be issued to the recipient. Critical compliance points include adhering to the 30-day reporting timeline for taxpayers with an AATO of ₹10 crores and above (effective April 1, 2025) and understanding that as per Rule 48(5) of the CGST Rules, 2017, any invoice issued by a liable taxpayer without a valid IRN is not considered a valid tax invoice, leading to penalties and denial of ITC for the recipient.

Here is a comprehensive breakdown of the essential steps and legal considerations for generating a valid e-invoice.

A. Procedural Steps for E-Invoice Generation

The process involves a seamless interaction between the taxpayer's system and the government-notified portals.

Step 1: Verify Applicability and Enablement Status

• Applicability: E-invoicing is mandatory for registered persons whose aggregate annual turnover (AATO), based on PAN, exceeds the notified threshold in any preceding financial year from 2017-18 onwards. The current threshold is ₹5 crores.

• Enablement Check: Taxpayers meeting the criteria are generally auto-enabled on the e-invoice portal. You can verify the enablement status at the official e-invoice portal: https://einvoice.gst.gov.in.

• Self-Enablement: If a taxpayer is liable but not auto-enabled, they can self-enable on the same portal. It is important to note that enablement is a technical prerequisite and does not, by itself, determine the legal obligation to issue e-invoices.

Step 2: One-Time Registration on an Invoice Registration Portal (IRP)

• A taxpayer must register on any of the six* authorised IRPs before reporting invoices. The list of active IRPs is available on the master e-invoice portal. 

• The registration is a one-time process that involves validating the registered mobile number and email address via an OTP. Upon successful validation, login credentials for the IRP are created.

* As of August 2025, the active Invoice Registration Portals (IRPs) for e-invoicing under Indian GST include both government-operated and authorised private portals. The following IRPs are currently active and empanelled for e-invoice generation:

• NIC IRP (https://einvoice1.gst.gov.in/ and https://einvoice2.gst.gov.in/)

• Clear IRP (https://einvoice4.gst.gov.in/)

• IRIS IRP (https://einvoice6.gst.gov.in/)

• EY IRP (https://einvoice5.gst.gov.in/)

• Additional government advisory mentions up to IRP-6, which implies at least six distinct IRPs are currently active.

Step 3: Prepare Invoice Data in the Prescribed Schema

• Taxpayers continue to generate invoices using their existing Accounting, Billing, or ERP systems.

• The invoice data must be structured according to the standard e-invoice schema, notified as FORM GST INV-01. This schema has mandatory and optional fields.

• The prepared data must be converted into a JSON (JavaScript Object Notation) file for uploading to the IRP.

Step 4: Report Invoice Data to IRP and Obtain IRN

• The JSON file is reported to the selected IRP through various modes, such as:

• API-based integration (for high-volume users).

• Offline utility tools (e.g., GePP-Offline).

• Online web-based tools.

• The IRP validates the submitted data against the GST system for correctness and checks for duplicates.

• Upon successful validation, the IRP:

1. Generates a unique 64-character Invoice Reference Number (IRN).

2. Digitally signs the complete invoice data (the JSON payload).

3. Generates a Quick Response (QR) Code containing the embedded IRN and other key invoice details.

4. Returns the signed JSON with the IRN and QR code to the taxpayer.

Step 5: Issue the Final Invoice to the Recipient

• The invoice issued to the recipient must include the QR code received from the IRP.

• As per Rule 46(r) of the CGST Rules, 2017, a tax invoice issued by a person to whom e-invoicing applies must contain the QR code with the embedded IRN.

B. Key Compliance and Legal Considerations

Beyond the procedural steps, certain legal provisions and timelines are critical to ensure compliance.

1. Legal Validity of the Invoice

• Rule 48(5) of the CGST Rules, 2017, is a crucial provision. It states that any invoice issued by a person to whom e-invoicing is applicable, in any manner other than that prescribed in Rule 48(4), shall not be treated as an invoice.

• Implication: Failure to generate an IRN for a mandatory B2B transaction renders the document invalid. This can lead to penalties for the supplier and denial of Input Tax Credit (ITC) for the recipient.

2. Time Limit for Reporting Invoices

• As per the GSTN advisory dated November 5th, 2024, a time limit for reporting documents on the IRP has been implemented.

• Threshold: Taxpayers with an AATO of ₹10 crores and above.

• Timeline: Effective from April 1, 2025, such taxpayers cannot report invoices, debit notes, or credit notes that are more than 30 days old from the date of the document.

• System Validation: The IRPs will have a built-in validation to prevent the generation of IRN for documents reported beyond this 30-day window.

• Note: This restriction does not currently apply to taxpayers with an AATO below ₹10 crores.

3. Auto-population into GST Returns

• Once an IRN is generated, the IRP shares the signed e-invoice data with the GST Common Portal.

• This data is then auto-populated into the relevant tables of the supplier's GSTR-1.

• Subsequently, these details are reflected in the recipient's GSTR-2A and GSTR-2B, facilitating ITC reconciliation.

4. Documents Covered under E-Invoicing

• The requirement to generate an IRN applies to the following documents issued to registered persons (B2B), for SEZ supplies, and for exports:

• Tax Invoices

• Credit Notes

• Debit Notes

C. Consequences of Non-Compliance with E-Invoicing Provisions

Failure to generate a valid e-invoice carries significant financial and legal repercussions for both the supplier and the recipient.

1. Invalidity of the Tax Invoice

• As stipulated under Rule 48(5) of the CGST Rules, an invoice issued by a liable taxpayer without a valid IRN is not considered a legal tax invoice. This is the foundational consequence from which other liabilities arise.

2. Imposition of Penalties

• Penalty for Incorrect Invoicing: As the document is not a valid invoice, it can be treated as a failure to issue an invoice. Section 122(1)(i) of the CGST Act, 2017, provides for a penalty for supplying goods or services without issuing any invoice or issuing an incorrect or false invoice. The penalty is ₹10,000 or the amount of tax evaded, whichever is higher.

• General Penalty: Section 125 of the CGST Act can also be invoked for contravening any provision of the Act or Rules for which no separate penalty is prescribed. This general penalty can extend up to ₹25,000.

3. Denial of Input Tax Credit (ITC) to the Recipient

• This is one of the most severe consequences. Section 16(2)(a) of the CGST Act mandates that a recipient must be in possession of a valid tax invoice to claim ITC.

• Since an invoice without an IRN is deemed invalid under Rule 48(5), the recipient cannot fulfil this primary condition. Consequently, the ITC on such an invoice will be denied, leading to a direct financial loss for the recipient and potential business disputes.

4. Applicability of Interest

• Failure to generate an e-invoice usually means the transaction is not declared in GSTR-1 and the related tax is not paid through GSTR-3B. This results in tax non-compliance.

• As per Section 50 of the CGST Act, interest is liable on the tax amount that has not been paid to the government by the due date.

5. Impediments in Goods Transportation

• During the movement of goods, the person in charge of the conveyance is required to carry a valid tax invoice or an e-way bill.

• An invoice without an IRN is not a valid document. This can lead to the detention or seizure of the goods and the conveyance under Section 129 of the CGST Act, resulting in the imposition of applicable tax and penalty.

• Circular No. 160/16/2021-GST clarifies that carrying a QR code with an embedded IRN suffices, reinforcing the necessity of a valid e-invoice for transit.

Note: Late fees under Section 47 are levied for the delayed filing of returns (e.g., GSTR-1, GSTR-3B) and are not a direct consequence of the non-generation of an e-invoice. However, procedural lapses related to e-invoicing often lead to delays in return filing, thereby attracting late fees indirectly.

Conclusion

The e-invoicing framework plays a vital role in the GST system, helping to keep data accurate, prevent tax evasion, and make ITC reconciliation smoother. Following the steps—from enablement and registration on an IRP to issuing an invoice with a valid IRN and QR code—is more than just a formal requirement; it's an essential legal obligation. Missing these steps can lead to serious issues, such as invalid invoices, hefty penalties and interest for suppliers, and, most importantly, the denial of rightful input tax credits for recipients. That’s why having a strong and timely e-invoicing process is key to staying compliant with GST rules and keeping business operations running smoothly.

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