E-invoicing under GST explained for small businesses: IRN, QR code and the ₹5 crore limit

E-invoicing under GST means reporting each B2B invoice to a government Invoice Registration Portal (IRP) before you hand it to the buyer. The portal returns an Invoice Reference Number (IRN) and a signed QR code that must appear on the invoice. It is mandatory for businesses whose aggregate turnover crossed ₹5 crore in any financial year since 2017-18. Smaller businesses do not generate IRNs, but they receive e-invoices from larger suppliers and need to know what to check.

What e-invoicing is and what it is not

The name causes confusion. E-invoicing does not mean creating invoices on a computer, and it does not mean the government makes your invoice. You still prepare the invoice in your own software, in your own format. What changes is that, for notified taxpayers, the invoice is not valid until its details have been uploaded to an IRP in a standard JSON schema (the "INV-01" schema), the IRP has validated it, and it has returned an IRN and a QR code.

The legal basis is Rule 48(4) of the CGST Rules, which says that a notified class of registered persons shall prepare invoices by uploading the prescribed particulars to the IRP and obtaining an IRN. Rule 48(5) adds the teeth: an invoice issued by such a person in any other manner is not treated as an invoice at all. That means no ITC for the buyer and a penalty for the supplier.

Who must generate e-invoices

E-invoicing applies to a registered person whose aggregate turnover exceeded ₹5 crore in any financial year from 2017-18 onwards. The threshold has been lowered in stages, and once you cross it in any year, you stay covered even if turnover later falls.

"Aggregate turnover" is the all-India, PAN-level figure under Section 2(6): taxable, exempt, export and inter-state supplies across all GSTINs, excluding GST itself and inward supplies under reverse charge. A business with ₹3 crore in Gujarat and ₹2.5 crore in Maharashtra under the same PAN is covered.

Which documents must be reported: tax invoices, credit notes and debit notes for B2B supplies, exports, supplies to SEZ units and developers, deemed exports, and supplies to government departments that are registered. Not covered: B2C invoices, bills of supply, delivery challans, receipt vouchers, import documents and reverse-charge self-invoices from unregistered suppliers. Businesses with turnover above ₹500 crore must print a dynamic QR code on B2C invoices too, but that is a different requirement.

Exempt categories regardless of turnover, under Notification 13/2020-Central Tax as amended: SEZ units (not developers), insurers, banks and other financial institutions including NBFCs, goods transport agencies, passenger transport services, multiplex cinema admissions, government departments and local authorities. Confirm your category with your CA if you fall near one of these.

How the IRN and QR code work, step by step

1. You create the invoice in your billing software with all Rule 46 fields, exactly as you would for any tax invoice.
2. The software converts it to the INV-01 JSON schema and sends it to an IRP, either directly through an API or by uploading a file on the portal.
3. The IRP validates the structure, checks that both GSTINs are active, confirms the document number is not a duplicate for your GSTIN and financial year, and checks the HSN codes and tax arithmetic.
4. The IRP generates the IRN, a 64-character hash of your GSTIN, the financial year, the document type (INV, CRN or DBN) and the document number. Because the hash includes your number, the same number can never get two IRNs.
5. The IRP digitally signs the invoice JSON and returns it with the IRN, an acknowledgement number and date, and a signed QR code string.
6. You print the QR code and the IRN on the invoice (the acknowledgement number and date are optional but commonly shown) and share it with the buyer.
7. The IRP pushes the data to the GST system, where it auto-populates your GSTR-1 and the buyer's GSTR-2B, and to the e-way bill system if transport details were included.

The QR code contains the supplier and recipient GSTINs, invoice number and date, invoice value, number of line items, HSN of the main item and the IRN. Anyone can scan it offline with the official verifier app and confirm the invoice is genuine.

The IRP portals

The National Informatics Centre runs the original portal at einvoice1.gst.gov.in, and the government has authorised additional private IRPs to spread the load. As of this writing there are six IRPs including NIC; the list is on the GST e-invoice portal and may change, so check there. All IRPs accept the same schema and return IRNs of the same validity; you can use any of them, and switching does not affect earlier IRNs.

For a business just over ₹5 crore with a few hundred B2B invoices a month, the practical options are: the free offline utility on the NIC portal (fill an Excel template, generate JSON, upload), the free NIC mobile app and web form for one-at-a-time entry, or billing software with an integrated API connection. The API route is the only one that scales, but the offline tool is enough for many small manufacturers and distributors.

The 30-day reporting window

Originally an IRN could be generated any time after the invoice date. That is no longer true for larger taxpayers. The IRP now rejects invoices older than 30 days from the invoice date for businesses with aggregate turnover of:

• ₹100 crore or more, from 1 November 2023, and
• ₹10 crore or more, from 1 April 2025.

The 30-day limit applies to credit notes and debit notes as well. A business between ₹5 crore and ₹10 crore is not currently subject to the time limit, but the direction of travel is clear and the threshold may drop again; confirm the current position on the e-invoice portal. Regardless of the technical window, remember that an invoice without an IRN is not a valid invoice from the moment it is issued, so waiting weeks to generate IRNs leaves your buyers without valid documents in the meantime.

What small businesses receiving e-invoices should check

Most readers of this post are below ₹5 crore and will never generate an IRN. But the moment you buy from a distributor, a manufacturer or a large service provider, you will receive e-invoices, and your ITC depends on them being valid. Check the following on every e-invoice you receive:

1. The QR code is present and scans. Use the "GST e-invoice QR code verifier" app. If the supplier is notified and the invoice has no QR code, it is not a valid invoice under Rule 48(5) and your ITC is at risk. Ask for a compliant copy.
2. The IRN is printed (or at least the acknowledgement number and date).
3. The scanned details match the paper. Supplier GSTIN, your GSTIN, invoice number, date and value. A mismatch means the printed invoice has been altered after IRN generation.
4. Your GSTIN is correct, so the invoice lands in your GSTR-2B and not someone else's.
5. It shows up in your GSTR-2B in the following month. E-invoice data auto-populates the supplier's GSTR-1, but the supplier still has to file. If it is missing, follow up before you take the credit. The conditions for claiming credit are in input tax credit explained.

Under Rule 138A(2), where an e-invoice has been issued, the QR code with the IRN can be shown electronically to an officer during transit instead of a physical invoice copy, so a driver with the PDF on a phone is covered.

Penalties for getting it wrong

Because an invoice without an IRN is treated as no invoice, the penalties for not issuing an invoice apply. Under Section 122(1), supplying goods or services without an invoice, or with an incorrect or false invoice, attracts a penalty of ₹10,000 or the amount of tax involved, whichever is higher. A separate penalty for an incorrect invoice of up to ₹25,000 is often cited under the same section. Goods in transit without a valid invoice can be detained under Section 129, covered in the e-way bill guide.

The commercial penalty is usually worse than the statutory one: the buyer's ITC is denied, so the buyer either refuses to pay the GST portion or stops dealing with you. Confirm current penalty amounts with your CA, as these provisions are amended periodically.

How e-invoicing relates to the e-way bill

The two systems are linked but separate. E-invoicing is about the validity of the invoice; the e-way bill is about the movement of goods worth more than ₹50,000. If you generate an IRN and include transporter details (transporter ID or vehicle number) in the JSON, the IRP passes the data to the e-way bill system and Part A of the e-way bill is created automatically, with the e-way bill number returned alongside the IRN. You then only add Part B (vehicle details) if it was not included.

If an e-way bill is active against an IRN, the IRN cannot be cancelled until the e-way bill is cancelled first. And for notified taxpayers, the e-way bill portal will not accept a B2B invoice number for which no IRN exists, so the order of operations is always: invoice, IRN, e-way bill, dispatch.

A worked example: Surat textile trader crossing ₹5 crore

Sethi Fabrics in Surat had aggregate turnover of ₹4.6 crore in FY 2024-25 and ₹5.4 crore in FY 2025-26. Because turnover exceeded ₹5 crore in FY 2025-26, e-invoicing applies to every B2B invoice Sethi Fabrics issues from 1 April 2026 onwards, and it will continue to apply in every future year even if turnover falls back to ₹4 crore.

On 26 June 2026 Sethi Fabrics sells 2,000 metres of polyester fabric to a registered garment maker in Tiruppur, Tamil Nadu, at ₹120 per metre.

The office prepares invoice SF/26-27/0318, uploads it to the IRP through its billing software, and receives an IRN and QR code within a few seconds. The consignment value is ₹2,52,000, well above ₹50,000, so an e-way bill is needed; because the transporter ID was included in the upload, Part A is auto-generated and the transporter fills Part B when the truck is assigned. The PDF invoice with the QR code goes to the Tiruppur buyer on WhatsApp, and the same data appears in Sethi's GSTR-1 for June and in the buyer's GSTR-2B in July.

If Sethi Fabrics had sold the same fabric to a walk-in unregistered buyer, no IRN would be required, but the e-way bill still would be. The GST rate on fabric should be confirmed against the current schedule after the September 2025 rationalisation.

Common mistakes

1. Measuring turnover for the wrong year. The test is "any financial year from 2017-18", not just last year.
2. Measuring turnover per GSTIN. It is PAN-level aggregate turnover across all states.
3. Forgetting credit and debit notes. B2B credit and debit notes need IRNs too.
4. Printing the invoice before the IRN. The QR code must be on the copy the buyer receives.
5. Trying to edit an IRN. Cancel within 24 hours or issue a credit note; there is no amend.
6. Buyers ignoring a missing QR code because the supplier "is a big company". Big companies are exactly the ones who must have it.
7. Assuming the IRP filed your GSTR-1. It pre-fills the data; you still verify and file by the 11th.

How VyaparKit helps

VyaparKit is built for businesses under the e-invoicing threshold and for the receiving side of e-invoices. The GST invoice and tax invoice tools produce Rule 46-compliant invoices with financial-year numbering and automatic tax split, and the GSTIN checker verifies a supplier's or buyer's GSTIN before you rely on their invoice. Purchase bills you record with the ITC flag feed a GST report with an ITC table so you can compare against GSTR-2B. VyaparKit does not connect to an IRP and does not generate IRNs or QR codes; if your turnover has crossed ₹5 crore, you need e-invoicing software or the government offline tool for your B2B invoices.

Next steps

• Add up your aggregate turnover for every year since 2017-18 across all GSTINs and note whether any year crossed ₹5 crore.
• If yes, register on einvoice1.gst.gov.in, test the offline utility, and generate IRNs before issuing any further B2B invoice.
• If no, install the QR verifier app and scan the next e-invoice you receive from a large supplier.
• Add "IRN present?" to your purchase bill checklist for suppliers you know are above ₹5 crore.
• Check the e-invoice portal each April for changes to the threshold and the reporting window.