E-Invoicing: Who Must, and for Which Documents

A business usually finds out that it should have been e-invoicing in one of three ways: a customer’s accounts team refuses an invoice without a QR code, a vehicle is stopped on the highway, or an officer asks why the GSTR-1 tables were typed in by hand. Each time the question is the same. Did this business cross the threshold, and in which year? And was this document one that had to go through an Invoice Registration Portal?

This guide sets out who is required to e-invoice, who is exempt, and which documents are covered. It also covers the separate rule for a dynamic QR code on invoices to consumers. How an e-invoice is generated is in the next guide. What happens when one is missed is in guide 703.

The rule that creates the duty

E-invoicing is not in the Act. It comes from rule 48(4) of the CGST Rules, inserted by Notification No. 68/2019-Central Tax. Under it, the invoice of a notified class of registered persons “shall be prepared … by including such particulars contained in FORM GST INV-01 after obtaining an Invoice Reference Number by uploading information contained therein on the Common Goods and Services Tax Electronic Portal”.

Two more sub-rules give it force. Rule 48(5) provides that an invoice issued by such a person “in any manner other than the manner specified in the said sub-rule shall not be treated as an invoice”. Rule 48(6) takes e-invoices out of the triplicate and duplicate copy requirement in rule 48(1) and (2).

The class of persons is fixed by notification, not by the rule. The notification is No. 13/2020-Central Tax of 21 March 2020, which has been amended several times since.

The threshold, and how it came down

Notification No. 13/2020 superseded Notification No. 70/2019, which had first named persons with aggregate turnover above Rs 100 crore, from 1 April 2020. As first issued, No. 13/2020 kept Rs 100 crore and deferred the start to 1 October 2020. The thresholds since then:

From	Aggregate turnover above	Amending notification
1 October 2020	Rs 500 crore	No. 61/2020 (30 July 2020)
1 January 2021	Rs 100 crore	No. 88/2020 (10 November 2020)
1 April 2021	Rs 50 crore	No. 05/2021 (8 March 2021)
1 April 2022	Rs 20 crore	No. 01/2022 (24 February 2022)
1 October 2022	Rs 10 crore	No. 17/2022 (1 August 2022)
1 August 2023	Rs 5 crore	No. 10/2023 (10 May 2023)

Rs 5 crore is the threshold today. No notification after No. 10/2023 has amended No. 13/2020 to lower it further.

Which year’s turnover counts

As first issued, the notification looked at aggregate turnover “in a financial year”. Notification No. 70/2020-Central Tax replaced those words with “any preceding financial year from 2017-18 onwards”. Three things follow from that wording:

• Any year counts. A business whose turnover exceeded Rs 5 crore in any year from 2017-18 is in the class, even if its turnover has since fallen.
• The current year does not. The e-invoice portal’s FAQs state that e-invoicing “is applicable only if the notified turnover is crossed in the previous years”. A business that crosses Rs 5 crore during 2026-27 comes in from 1 April 2027.
• Turnover is counted across the PAN. “Aggregate turnover” in section 2(6) covers all supplies “of persons having the same Permanent Account Number, to be computed on all India basis”. Every GSTIN under the PAN is in the class once the PAN’s combined turnover has crossed the threshold.

The portals keep a list of “enabled” GSTINs, worked out from return data. The e-invoice portal’s FAQs say that enablement is “a facilitation measure”. The obligation under rule 48(4) “lies with concerned taxpayer”. A business that is required to e-invoice but has not been enabled can declare its turnover online and ask to be enabled.

Who is exempt

The notification applies to a registered person “other than” the following:

• A Special Economic Zone unit. Inserted by Notification No. 61/2020. The exemption is for an SEZ unit, not an SEZ developer. The e-invoice schema validations confirm that an SEZ unit “cannot generate e-Invoice”, while an SEZ developer is an accepted supplier type.
• A government department and a local authority. Inserted by Notification No. 23/2021-Central Tax of 1 June 2021.
• The suppliers in rule 54(2), (3), (4) and (4A). Rule 54 lets these suppliers issue a special form of invoice. They are:
  • an insurer, a banking company, or a financial institution including a non-banking financial company (rule 54(2))
  • a goods transport agency carrying goods by road in a goods carriage (rule 54(3))
  • a supplier of passenger transportation service (rule 54(4))
  • a supplier of admission to cinema exhibition in multiplex screens (rule 54(4A))

The exemption is for the supplier as a whole, not for particular supplies. A bank does not e-invoice even when it sells an asset to a registered buyer.

An exempt supplier whose turnover is above the threshold still has a duty on its invoices. Clause (s) of rule 46, inserted by Notification No. 14/2022-Central Tax from 5 July 2022, requires a declaration on every invoice it issues other than through an IRP. The declaration states that its aggregate turnover in a preceding year exceeded the notified figure. It then states: “we are not required to prepare an invoice in terms of the provisions of the said sub-rule.” The declaration lets a customer or an officer see why an invoice above the threshold carries no IRN.

The exemption runs only one way. A business above the threshold that supplies to an exempt person still e-invoices. CBIC Circular No. 198/10/2023-GST (17 July 2023) applied this to government departments, local authorities and PSUs registered only to deduct tax at source under section 51. Such bodies are “registered persons”. A supplier above the threshold must therefore issue e-invoices to them.

For exempt businesses that the portal has enabled by default, GSTN announced in July 2023 an optional e-invoice exemption declaration on the e-invoice portal. GSTN’s advisory said the declaration does not change the enablement status. It also said that deciding whether an exemption applies remains the taxpayer’s responsibility.

Which documents

E-invoicing covers three document types: invoices, credit notes and debit notes. GSTN’s detailed overview of the system describes them as issued “by notified class of taxpayers to registered persons or for exports”. This follows the notification itself. It covers supplies “to a registered person”, and, after Notification No. 70/2020, “or for exports”.

Within that scope, the e-invoice schema has six supply types:

• B2B: supplies to a registered person
• SEZWP and SEZWOP: supplies to an SEZ unit or developer, with or without payment of tax. The schema allows these only where the recipient’s GSTIN is registered as an SEZ unit or developer, and treats them as inter-State.
• EXPWP and EXPWOP: exports, with or without payment of tax. For a direct export the recipient GSTIN is entered as “URP” with state code 96. The portal’s FAQs confirm that exports of services are covered too.
• DEXP: deemed exports, allowed where the recipient is a regular or casual taxpayer

Reverse charge supplies are covered too. The schema validations say: “Even in case of Reverse Charged invoices, the Supplier has to generate the IRN.” In this case the supplier sets the reverse charge flag. The FAQ answer speaks of RCM invoices “issued by the Supplier”. It does not deal with the invoice a recipient raises on itself for a purchase from an unregistered person.

Some things fall outside:

• B2C supplies. The schema validations say B2C invoices “will not be considered” and that no IRN should be requested for them.
• Supplies to a UIN holder (an embassy or a UN body). CBIC Circular No. 156/12/2021-GST says that a UIN holder is not a “registered person”. An invoice to it is a B2C invoice for the QR code rule described below.
• Other documents. Delivery challans, receipt vouchers and the other documents listed in GSTR-1 table 13 are not among the three document types.

The dynamic QR code on invoices to consumers

B2C invoices have a separate rule. The sixth proviso to rule 46 lets the Government require a QR code on the tax invoice. Notification No. 14/2020-Central Tax (21 March 2020), as amended by No. 71/2020, requires a dynamic QR code on B2C invoices issued from 1 December 2020 by a registered person whose aggregate turnover exceeded Rs 500 crore in any preceding year from 2017-18.

This is not e-invoicing. No IRN is obtained, and the threshold is Rs 500 crore, not Rs 5 crore. The notification excludes the rule 54(2), (3), (4) and (4A) suppliers. It also excludes persons registered under section 14 of the IGST Act, that is, suppliers of online information and database access or retrieval services (OIDAR) from outside India.

CBIC has clarified the requirement in three circulars:

• What the code holds (Circular No. 146/02/2021-GST). The supplier’s GSTIN and UPI ID, its bank account and IFSC, the invoice number and date, the total invoice value, and the GST amount split by tax head. The code must be scannable for payment. Circular No. 156/12/2021-GST later said bank details need not be given separately where the UPI ID is linked to the account.
• Pre-paid supplies (Circular No. 146/02/2021-GST). Where payment is received before the invoice is issued and the invoice carries a cross-reference to the payment, the invoice is treated as complying. Exports are excluded because they are e-invoiced as B2B supplies.
• Payment by an agent, and counter sales (Circular No. 156/12/2021-GST). The UPI ID of a person collecting on the supplier’s behalf may be used. A unique order ID may stand in for the invoice number in counter sales.
• Foreign recipients (Circular No. 165/21/2021-GST). No dynamic QR code is needed where the recipient is outside India, the place of supply is in India, and payment comes in convertible foreign exchange or in rupees where RBI permits.

Penalty under section 125 for not complying was waived for 1 December 2020 to 30 September 2021 by Notification No. 28/2021-Central Tax, which superseded the earlier waivers in Nos. 89/2020 and 06/2021. No waiver covers later periods.

Checking whether a business is in

1. Find the highest aggregate turnover of the PAN, all GSTINs together, for each year from 2017-18 to last year.
2. If it ever exceeded the threshold in force on the invoice date (Rs 5 crore from 1 August 2023), the business is in the class from the dates in the table above.
3. Check whether the supplier is an SEZ unit, a government department or local authority, or a rule 54(2), (3), (4) or (4A) supplier. If it is, it is exempt.
4. If it is not exempt, every invoice, credit note and debit note to a registered person (including SEZs, deemed exports and reverse charge supplies) and every export document goes through an IRP.
5. If aggregate turnover ever exceeded Rs 500 crore, B2C invoices also carry a dynamic QR code under Notification No. 14/2020.

The next guide covers how an e-invoice is generated: the IRPs, the schema, the QR code, cancellation and the 30-day reporting limit.