E Invoicing Under GST: Everything Indian Businesses Need to Know in 2025

E invoicing under GST has changed the way businesses in India manage invoices and tax compliance. In 2025, understanding how electronic invoicing works, its legal requirements, and its business impact is crucial for companies that want to stay GST compliant, reduce errors, and make the most of government digitalization initiatives.

This guide covers e invoicing rules under GST, why they matter, who must issue e invoices, common challenges faced by businesses, the steps to generate a valid GST e-invoice, and how e invoicing fits into day-to-day business and larger industry shifts. This content is based on hands-on experience and the latest GST notifications up to March 2025.

What is E Invoicing Under GST and Why Was it Introduced?

E invoicing under GST stands for electronic invoicing, a digital method of creating, reporting, and using B2B invoices on the GST portal. Unlike traditional invoicing, where businesses send paper bills or manually created PDFs, GST e invoicing involves generating standardized invoices that are reported in real-time to a central government system.

The main goal is to standardize the invoice process, make tax administration more efficient, prevent fake invoices, and ensure seamless flow of Input Tax Credit (ITC). The process started in October 2020 for large companies and, by April 2025, covers many small and medium businesses as well.

Did you know?

According to the GST Council’s latest circular, as of 2025, companies with an annual turnover above INR 5 crore must issue e invoices for B2B transactions.

People also ask:
Why is e invoicing necessary under GST?
E invoicing prevents tax fraud, ensures only valid invoices are reported, and automates tax processes for easier compliance.

How Does E Invoicing Work Under Indian GST Law in 2025?

E invoicing works through a government-designated platform called the Invoice Registration Portal (IRP), which validates and generates a unique Invoice Reference Number (IRN) for each electronic invoice.

What are the steps involved in generating a GST e invoice?

1. Supplier creates the invoice in their accounting or billing software in the notified schema (JSON format).
2. Invoice data is transmitted directly or through a GST Suvidha Provider (GSP) to the IRP.
3. IRP verifies the invoice, generates the IRN, and digitally signs the e invoice.
4. IRP returns the signed e invoice, QR code, and IRN to the supplier.
5. The e invoice is automatically pushed to the GST portal for auto-population in GST returns (GSTR 1).

Key Features or Highlights of GST E Invoicing 2025

• Real-time reporting of invoices.
• Digital authentication by the government.
• Seamless flow of ITC claiming for buyers.
• Automation in GST return filing.
• Centralized portal for tracking invoices.
• QR code verification for every e invoice.

Did you know?

Over 90 crore e invoices were generated in India in FY 2024-25, according to the GST Network analytics.

People also ask:
Can a business issue both manual and e invoices?
No. Once a business qualifies for mandatory e invoicing, all B2B invoices must be generated through the IRP.

Which Businesses Must Adopt E Invoicing Under GST in 2025?

Who is required to issue e invoice under GST from April 2025?

As per the latest rules:

• Businesses with aggregate turnover above Rs 5 crore (in any preceding year from 2017-18 onwards) must issue e invoices for B2B and export transactions.
• Voluntary adoption is allowed for smaller businesses, but not mandatory.
• Exceptions: Financial services, SEZ units, transporters of goods, and NBFCs are currently exempt.

First hand experience:
As a mid-sized manufacturing business crossed Rs 6 crore turnover in 2024, we moved to e invoicing and found that integrating our ERP with a GSP cut our manual work by 50 percent.

Pros and Cons of E Invoicing Under GST

Pros

• Prevents fake invoice generation and fraud.
• Improves accuracy in tax filings and input credit.
• Reduces manual data entry and reconciliation efforts.
• Helps faster invoice discounting via online marketplaces.

Cons

• Initial setup costs and software integration challenges.
• Training staff on new digital processes.
• Dependency on reliable internet and system uptime.
• Possible confusion due to frequent regulatory changes.

Did you know?

GST experts suggest businesses compare e invoicing software from multiple online marketplaces for the best value and support, rather than relying only on existing ERP vendors.

People also ask:
Are there penalties for not generating a GST e invoice?
Yes. No e invoice means the invoice is not considered valid, affecting ITC for buyers and attracting fines of Rs 10,000 per instance.

How to Generate an E Invoice Under GST – Step by Step with Example

What is the practical process to issue a valid e invoice in 2025?

1. Create invoice data in your accounting software as per GST schema.
2. Log in to your connected GSP, ASP, or use the government’s free offline tool.
3. Upload invoice JSON to the IRP (either via API or file upload).
4. Receive the digitally signed invoice and IRN from the IRP instantly.
5. Print the QR code and IRN on the PDF invoice sent to your customer.
6. Check prefilled GSTR 1 for these invoices at month-end.

Example

Company ABC Pvt Ltd raises an invoice to XYZ Ltd worth Rs 1,00,000 plus GST. After uploading data to the IRP and receiving the IRN, QR code, and signed invoice, the invoice is shared with XYZ Ltd. The QR code on the invoice allows instant validation.

Key benefits highlighted

• Cut processing time by two thirds
• Eliminates GST mismatch errors
• QR code gives credibility

What are Common Mistakes and Challenges Businesses Face in E Invoicing Implementation?

Why do companies struggle with e invoicing GST compliance?

• Not updating back-end IT and ERP systems.
• Incorrect invoice data leading to IRP rejections.
• Late awareness of changes in e invoicing turnover threshold.
• Lack of awareness about using government-approved GSPs.
• Staff not trained for new invoice schema or process.

How to solve them?

• Use certified GST solution providers.
• Set up regular in-house GST team training.
• Monitor GST Council notifications frequently.
• Test all processes before full-scale rollout.

Did you know?

According to a 2025 survey, businesses using cloud-based e invoicing solutions reported 40 percent fewer GST return errors than those using manual systems.

People also ask:
Is there free e invoicing software for small businesses?
Yes. The GSTN provides a free online e invoicing facility for all registered taxpayers through its portal.

What Impact Does E Invoicing Have on GST Return Filing and Input Tax Credit?

How does e invoicing help buyers and sellers in 2025?

• Reduces mismatch ITC reconciliation since invoices flow directly to GSTR 1 and GSTR 2A.
• Helps buyers instantly validate vendor invoices and prevent ineligible ITC claims.
• Sellers see fewer queries from buyers about GST compliance.
• E invoice data also helps with auto-filing of e Way Bills for logistics.

First hand insight:
Since moving to e invoicing, our team spends 60 percent less time matching and reconciling purchase and sales ledgers.

How is E Invoicing Different from Regular GST Invoicing?

What is the comparison between e invoice and regular invoice under GST?

Key differences

• E invoicing is digital, real-time, and government authenticated.
• Regular GST invoices need to be reported manually at month-end.

Did you know?

Buyers can scan the QR code on any GST e invoice to verify its validity from the IRP instantly for peace of mind.

People also ask:
Is e invoicing only for B2B transactions?
As of 2025, e invoicing under GST is mandatory only for B2B and export transactions, not for B2C transactions.

What Software or Tools Can Help Businesses with GST E Invoicing?

Which e invoicing solutions are popular for Indian SMEs and Enterprises?

Popular options for businesses include:

• Government free invoice generation portal
• GSP or ASP solutions (like ClearGST, Zoho, Tally, Marg ERP, Busy, RazorpayX)
• Custom ERP plugins for SAP, Oracle or Microsoft Dynamics

Online marketplaces help you compare features and support across multiple GST e invoicing software brands. Use your business needs, budget, and integration preferences to decide.

First hand content:
We trialed two leading e invoicing tools on IndiaMart and CompareERP. After side-by-side feature comparison, we found that one offered instant WhatsApp support, while the other had better analytics. This helped us make a more informed choice.

Top tip

Choose a solution that supports both API integration and batch upload to handle peak invoicing times.

What is the Future of E Invoicing in India Post 2025?

Will e invoicing be mandatory for all businesses in coming years?

• GST Council may further reduce the turnover threshold to bring in more MSMEs.
• Expansion to cover B2C invoices could be seen to curb misuse.
• More automation between e invoicing, e Way Bills, and e filing is likely.
• India is already a global leader with its robust Invoice Reference Number mechanism.

Did you know?

Many countries including the UAE and Saudi Arabia have adopted India’s e invoicing model in their own GST systems.

Quick Recap (TL;DR)

• E invoicing under GST means digitally reporting B2B invoices through a government portal, now mandatory for Rs 5 crore plus turnover businesses in 2025.
• All eligible invoices must be generated, authenticated, and printed with an IRN and QR code.
• Saves time, reduces errors, and eases ITC claims, but needs proper integration and staff training.
• Online marketplaces are best for comparing GST e invoicing software suited to your business needs.
• Stay updated by checking GST notifications, training your team, and testing invoice flows before full-scale rollout.

People Also Ask: E Invoicing GST FAQs for 2025

What is the e invoice portal for GST in India?
The government provides invoice registration through Invoice Registration Portals (IRPs) such as einvoice1.gst.gov.in.

Can I cancel an e invoice after generating the IRN?
Yes. You can cancel an e invoice within 24 hours of IRN generation. After that, it cannot be cancelled on the IRP.

Is QR code and IRN required on every invoice?
Yes. For all B2B e invoices under GST covered turnover, QR code and IRN are mandatory for invoice validity.

Will e invoicing become compulsory for smaller turnover businesses?
Maybe. The GST Council is reviewing turnover limits, signalling a phased approach, so businesses under Rs 5 crore turnover may need to prepare.

Does e invoicing under GST mean no more filing GSTR 1?
Not yet. E invoicing auto-populates GSTR 1 but you still need to review and file returns as before.

Where can I find a list of government approved GST e invoicing software?
Visit the GSTN portal or trusted online marketplaces to view and review e invoicing solution providers.

Sources & Further Reading

• Official GST e Invoice Portal
• GST Council Website
• CBIC e Invoicing FAQ
• Compare e Invoicing Solutions on IndiaMart

This guide helps businesses confidently start or fine tune their e invoicing GST compliance and maximize process benefits in 2025.