E-Invoicing Basics: What It Is and Who Needs to Generate IRNs

When the Goods and Services Tax (GST) system launched, businesses generated invoices on their own software and summarized them later in their monthly returns. This time lag allowed fraudsters to create fake invoices and claim bogus Input Tax Credits.

To plug this revenue leak, the government introduced E-Invoicing (Electronic Invoicing).

Despite the name, e-invoicing does not mean you generate your invoice directly on a government portal. Instead, it means you generate an invoice on your own software as usual, but you must electronically report it to the government portal for validation before sending it to the buyer.

This guide explains the basics of e-invoicing, determining if it applies to your business, and how to comply in the 2026 Assessment Year.

What is E-Invoicing?

E-invoicing under GST is the process of authenticating B2B (Business-to-Business) and Export invoices by a governmental portal called the Invoice Registration Portal (IRP).

When you upload your invoice data (in a specific JSON format) to the IRP, the system instantly checks it for uniqueness and errors. If valid, the IRP returns a digitally signed JSON response containing two crucial elements:

1. Invoice Reference Number (IRN): A unique 64-character hash based on your GSTIN, document type, document number, and financial year.
2. Dynamic QR Code: A scannable code containing the invoice's core parameters.

A Tax Invoice issued to a registered buyer without an IRN and QR code is considered legally invalid, and the buyer cannot claim Input Tax Credit.

Legal Reference

Relevant Law: Rule 48(4) of the CGST Rules, 2017 outlines the mechanism for generating an e-invoice by uploading specified particulars in Form GST INV-01 on the common portal.

Applicability: Who Needs to Generate E-Invoices?

E-invoicing has been implemented in deliberate, phased turnover limits. For the 2026 Assessment Year, the mandate applies to:

Any registered person whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds ₹5 Crores.

If your turnover hit ₹6 Crores back in FY 2018-19, but dropped to ₹3 Crores last year, you are still required to generate e-invoices today. Once you cross the threshold, the mandate applies permanently.

Which Transactions Require the IRN?

E-invoicing is mandatory only for:

• B2B supplies (Business to registered Business).
• Exports (Zero-rated supplies).
• Supplies to SEZs.
• Deemed Exports.
• Issuing Credit Notes and Debit Notes for the above transactions.

It is NOT required for B2C (Business to Consumer) invoices, exempt supplies (Bill of Supply), or import transactions.

Who is Exempt from E-Invoicing?

Even if their turnover exceeds ₹5 Crores, specific sectors are exempt from generating IRNs:

• Banks, insurers, and financial institutions (including NBFCs).
• Goods Transport Agencies (GTAs) supplying transport services.
• Passenger transportation services (e.g., airlines).
• Multiplex cinemas (for admission tickets).
• Units operating in Special Economic Zones (SEZs). (Note: SEZ Developers are not exempt).

How Does E-Invoicing Work? The 4-Step Process

1. Invoice Creation: You create a regular bill on your ERP or billing software containing all mandatory tax invoice fields (including the buyer's GSTIN and HSN codes).
2. Data Push (JSON Upload): Your software generates a JSON payload and pushes it to the IRP. Small businesses can do this manually using offline government utilities.
3. IRP Validation: The portal checks the data. If the invoice number hasn't been used before in that financial year, it generates the IRN and QR code.
4. Final Invoice Generation: Your software receives the JSON back, prints the IRN and QR code onto your invoice template, and you hand this verified PDF to your customer.

Integration Bonus: The verified data automatically flows into the e-way bill portal (generating an e-way bill if required) and into your GSTR-1 return, nearly eliminating manual data entry.

Canceling an E-Invoice

If you generated an IRN but immediately realize you made a typo, you can cancel the e-invoice on the IRP, but only within 24 hours.

After 24 hours, the IRP locks the IRN. You cannot cancel it online anymore. Instead, you must issue a formal GST Credit Note (and generate an IRN for that Credit Note) to reverse the financial impact in your buyer's ledger.

Crucial Rule: Once an IRN is canceled (or a document number used), you cannot use that same invoice serial number again during the entire financial year.

Common Mistakes Beginners Make

1. Missing the 30-Day Limit: There is now a hard time limit on reporting old invoices to the IRP. An invoice must be reported and an IRN generated within 30 days of the invoice date. You cannot wait until the month-end return filing date to generate e-invoices in bulk.
2. Ignoring B2G Invoices: B2B includes transactions with the government. If you supply goods to a government department that holds a GSTIN (for TDS deduction purposes), you must generate an e-invoice for them.
3. Modifying Invoices After IRN Generation: An e-invoice cannot be partially matched or modified. If you need to change the quantity from 10 to 8 after generating the IRN, you must cancel the IRN (within 24hrs) or issue a Credit Note. You cannot simply edit the PDF and send it to the buyer.

Conclusion

E-invoicing is India’s definitive method for ensuring supply chain transparency. If your turnover crosses ₹5 Crores, adopting an IRP-integrated billing system is not just an active compliance need—it is the basic prerequisite for getting paid by large corporate buyers who rely on your validated QR codes for their Input Tax Credit.