E-invoicing (IRN) — who needs it and how it works

E-invoicing does not mean "an invoice sent by email". Under GST it means registering each B2B invoice with a government system — the Invoice Registration Portal (IRP) — before you give it to your customer. The IRP checks the invoice, gives it a unique Invoice Reference Number (IRN) and returns a digitally signed QR code that must be printed on the invoice.

Who has to e-invoice?

E-invoicing is compulsory for a registered business whose aggregate turnover in any financial year from 2017-18 onwards has crossed the limit notified by the government. The limit has been lowered in stages since 2020, from very large companies to much smaller ones.

Some kinds of business are excluded by notification even above the limit — for example SEZ units, insurers, banks and NBFCs, goods transport agencies, passenger transport services and cinema admissions. Check the current list if you are in one of these sectors.

Which documents need an IRN?

• B2B tax invoices — sales to a registered buyer.
• Credit notes and debit notes issued against those invoices.
• Exports and supplies to SEZs, which are treated as B2B for e-invoicing.
• Not B2C invoices — sales to consumers or unregistered buyers do not get an IRN.

How it works, step by step

1. You make the invoice in your billing software as usual.
2. The software sends it to the IRP in the government’s standard e-invoice format (JSON), using your e-invoice API credentials.
3. The IRP validates it — GSTIN, invoice number, dates, tax amounts — and rejects it with a reason if something is wrong.
4. The IRP returns the IRN and signed QR code. Your software prints them on the invoice.
5. The details flow on to your GSTR-1 and, if you add transport details, to the e-way bill system — so there is less to type again.

Without the IRN, an invoice from a business that must e-invoice is not a valid tax invoice — the buyer cannot rely on it for input tax credit.

Cancelling and correcting

• Cancelling: an IRN can be cancelled on the IRP only within a short window after it is generated (24 hours at the time of writing). The whole invoice is cancelled — you cannot cancel part of it.
• After the window: you cannot cancel the IRN. Correct the invoice with a credit note or debit note, which gets its own IRN, or amend it in your GSTR-1.
• Invoice numbers: once an IRN has been generated for a number, that number cannot be registered again, even after cancelling. Use the next number.

Reporting on time

Report invoices to the IRP when you issue them. Larger businesses are not allowed to report invoices older than a set number of days, and the set of businesses covered by that time limit has been widened over time. Check the latest GSTN advisory for the current limit that applies to your turnover.

Getting ready

1. Check your aggregate turnover for every year since 2017-18 against the current limit.
2. Create e-invoice API credentials for your billing software on the IRP (from your GST login), and enter them in the software.
3. Clean up customer master data: correct GSTINs, legal names, state and PIN codes. Most rejections come from here.
4. Make sure every item has a valid HSN/SAC code and unit.
5. Do a test run on a single invoice before your first busy day.