Introduction
The GST Council's decision to extend the e-invoicing mandate to businesses with turnover exceeding Rs 5 crore has brought thousands of additional businesses under the compliance net. This phased expansion, which began with the Rs 500 crore threshold in October 2020, now covers a significant portion of India's business ecosystem.
For businesses approaching this threshold, the transition is not merely a technical upgrade. It represents a fundamental shift in how invoices are generated, validated, and reported. The stakes are high: non-compliance can result in denial of Input Tax Credit to your customers, rendering your invoices commercially worthless.
Understanding the E-Invoice Requirements
E-invoicing under GST is not simply a digital version of a paper invoice. It represents a standardised format for invoice data that must be reported to the Invoice Registration Portal in real time. The Portal validates the invoice, assigns a unique Invoice Reference Number, and digitally signs the invoice with a QR code.
The process is designed to create an auditable trail from invoice generation to tax filing. Every B2B invoice above the threshold must pass through this validation before it can be issued to the recipient. The recipient's ability to claim Input Tax Credit depends entirely on this validation.
Technical Specifications
Businesses must ensure their accounting systems can generate invoices in the prescribed JSON schema. The schema includes mandatory fields such as supplier and recipient GSTIN, invoice date, HSN codes, and tax details. Any deviation from the schema results in rejection at the Portal level.
The technical integration requires careful attention. Many businesses underestimate the complexity of mapping their existing invoice fields to the e-invoice schema. HSN codes must be accurate to the specified digit level. GSTIN validation must be real-time. The invoice date must align with the reporting date within the permitted window.
Common Compliance Pitfalls
Our advisory practice has identified several recurring issues that businesses face during the transition. These are not theoretical concerns but practical problems we have helped clients resolve.
First, incorrect HSN code mapping leads to invoice rejection. Many businesses operate with legacy HSN codes or use codes at a different digit level than required. The Portal's validation is strict and unforgiving.
Second, timing mismatches between invoice generation and Portal reporting create operational disruptions. Businesses accustomed to batch processing invoices at month-end find themselves unable to comply with real-time reporting requirements.
Third, inadequate testing of ERP integration before go-live causes embarrassing failures. The sandbox environment provided by the government is underutilised. Businesses that skip thorough testing often discover critical errors only when they attempt to issue their first live invoice.
Fourth, failure to maintain QR code integrity in printed invoices creates downstream complications. The QR code must be readable and must accurately reflect the digitally signed invoice data.
Strategic Recommendations
Businesses approaching the Rs 5 crore threshold should begin preparation at least three months in advance. This timeline allows for system upgrades, staff training, and pilot testing with the sandbox environment.
The cost of non-compliance, including denial of ITC to recipients, far exceeds the investment in proper implementation. A single rejected invoice can damage customer relationships. A pattern of non-compliance invites regulatory scrutiny.
We recommend engaging your software vendor early in the process. Many accounting software providers have updated their systems for e-invoicing compliance, but the integration with your specific business processes requires customisation. Do not assume that a software update alone will ensure compliance.
Conclusion
E-invoicing represents a fundamental shift in GST compliance methodology. While the initial implementation requires effort, the long-term benefits include reduced reconciliation issues, faster ITC claims, and enhanced audit trails.
Businesses that embrace this transition proactively will find themselves better positioned in the evolving GST landscape. Those that delay will face increasing compliance pressure and potential business disruption. The choice is clear: invest in compliance now, or pay a higher price later.
