India E-Invoicing: All You Need to Know

Under India’s Goods and Services Tax (GST) framework, the country’s e-invoicing system falls under the category of continuous transaction controls (CTCs). India’s electronic invoicing mandate currently includes B2G and B2B transactions.

While the system has now been in place for a number of years, familiarisation and optimisation are not simple. This page aims to help, providing everything you must now about the e-invoicing system in India –bookmark it to stay on top on any future changes.

How does e-invoicing work in India?

The obligation to report invoice data to the governmental portal, the Invoice Registration Portal (IRP), is a mandatory step before an invoice can be issued.

The legal validity of the invoice is conditional on the IRP, which digitally signs the invoice and provides an Invoice Reference Number (IRN). If the IRN is not included in an invoice, the document will not be legally valid.

India’s e-invoicing scope covers both domestic and cross-border transactions. The IRP process is mandatory for B2B, B2G and export transactions. So, taxpayers in scope must issue their invoices (as well as other documents that need an IRN e.g. associated eWaybills) according to the new system for all B2B, B2G or export transactions. India has made multiple changes to the initial regulation, and future changes are inevitable.

Electronic invoices must be securely archived for eight years.

Format of electronic invoices in India

Firstly, all e-invoices must be submitted to the nation’s invoice portal in JSON format. From there, the IRP will generate the IRN, include it in the JSON, and sign the file. The IRP will also generate the QR code data which can be used to generate a QR code.

Like with paper invoices and other nations’ versions of e-invoices, India has strict requirements for the information included on electronic invoices issued by businesses.

Required information includes:

  • Unique invoice number
  • Buyer and seller details
  • Issuance date
  • Description of goods and/or services
  • Quantity, price and total amount
  • Tax details (e.g. amount payable)

Timeline of e-invoicing adoption in India

India’s journey to implementing e-invoicing began in 2020 and is still ongoing. Here are the key dates and developments:

  • 1 January 2020:Voluntary period for businesses with a turnover of Rs.500 Crore or more.
  • 1 February 2020:Voluntary period for businesses with a turnover of Rs.100 Crore or more.
  • 1 October 2020:Beginning of the mandatory period for businesses with a turnover of Rs.500 Crore or more (six months later than previously intended). For the first 30 days, there was a grace period during which invoices could be reported after they had been issued.
  • 1 January 2021:Beginning of the mandatory period for businesses with a turnover of Rs.100 Crore or more.
  • 1 April 2021:Threshold for mandatory e-invoicing lowered to taxpayers with turnover between Rs. 100 Crore to Rs. 50 Crore.
  • 1 April 2022:Threshold lowered from Rs. 50 Crore to Rs. 20 Crore. Taxpayers above Rs. 20 Crore must implement e-invoicing.
  • 1 October 2022:Threshold lowered to taxpayers with an annual threshold of Rs. 10 Crore.
  • 1 August 2023:Threshold lowered to taxpayers with an annual threshold of Rs. 5 Crore.
  • September 2024: GST Council recommends pilot rollout for B2C e-invoicing following a successful implementation of e-invoicing for B2B transactions.
  • 1 October 2024: The Invoice Management System is launched on the Goods and Services Tax portal.

Penalties: What happens if I don’t comply with e-invoicing in India?

If an invoice is not registered on the IRP, it will be considered unissued and will result in penalties of at least 10,000 Rupees for each instance of noncompliance. Penalties under various sections of GST will be levied with interest.

FAQ

Issuing electronic invoices is mandatory for domestic companies in India that surpass the annual threshold of Rs. 5 Crore, specifically for B2B, B2G and export transactions.

India introduced its e-invoicing system on 1 October 2020, though its use was not mandated to all taxpayers at launch.

An electronic invoice, or e-invoice, is a digital version of the traditional paper invoice that is submitted and transferred online. Many countries now mandate the electronic issuance of invoices, including India.

All companies established in India that surpass the Rs. 5 Crore threshold must issue electronic invoices when selling to businesses and government entities.

Setting up e-invoicing in India with Sovos

The initial specifications published by the Indian tax authority in December 2019 had already been revised three times by February 2021. Future changes are inevitable.

Our experts continually monitor, interpret, and codify these changes into our software, reducing the compliance burden on your tax and IT teams.

Find out how Sovos can help you meet your clearance e-invoicing obligations in India.

Complete the form below to speak with one of our e-invoicing experts