Last reviewed: 12 September 2026. Every year a fresh batch of businesses crosses ₹5 crore turnover and discovers, usually from an accountant or an auditor rather than from the GST portal itself, that their invoices now need an Invoice Reference Number (IRN) before they are valid at all. Get this wrong and the damage isn't just a compliance note — it lands on your buyer's input tax credit and, eventually, on your own notice tray. Here is exactly who must e-invoice for FY 2026-27, what the 30-day reporting rule means for larger taxpayers, who is exempt, and what actually happens when an invoice goes out without an IRN.
What e-invoicing actually requires
E-invoicing under Rule 48(4) of the CGST Rules does not mean designing a new invoice format. It means a notified taxable person must report specified invoice particulars electronically to a government-notified Invoice Registration Portal (IRP), which validates the data, generates a unique Invoice Reference Number (IRN) and a signed QR code, and returns both to the supplier. The supplier then prints the IRN and QR code on the same invoice before it is issued to the buyer. The invoice format your accounting software already produces stays the same — what changes is that it must pass through the IRP first.
The ₹5 crore threshold — and how we got here
The mandatory turnover threshold has been lowered in stages since e-invoicing was first introduced, and the current ₹5 crore limit is the sixth step down from the original ₹500 crore:
| Notification | AATO threshold | Effective from |
|---|---|---|
| Notification 61/2020-CT | ₹500 crore | 1 Oct 2020 |
| Notification 88/2020-CT | ₹100 crore | 1 Jan 2021 |
| Notification 05/2021-CT | ₹50 crore | 1 Apr 2021 |
| Notification 01/2022-CT | ₹20 crore | 1 Apr 2022 |
| Notification 17/2022-CT | ₹10 crore | 1 Oct 2022 |
| Notification 10/2023-CT | ₹5 crore (current) | 1 Aug 2023 |
"AATO" is Aggregate Annual Turnover computed on a PAN-India basis across all GSTINs held under that PAN — not turnover of a single registration. Crucially, the threshold test looks at any financial year from 2017-18 onwards, not just the immediately preceding year. Once your PAN's turnover has crossed ₹5 crore even once since GST began, e-invoicing applies to you going forward in every subsequent year, including a year in which turnover happens to dip below ₹5 crore again.
Worked example: when does e-invoicing actually start?
A Thane-based engineering components manufacturer, single GSTIN, reports the following PAN-level AATO:
| Financial year | AATO | Above ₹5 crore? | E-invoicing status |
|---|---|---|---|
| FY 2023-24 | ₹4.10 crore | No | Not applicable |
| FY 2024-25 | ₹5.60 crore | Yes | Not applicable for FY 2024-25 itself |
| FY 2025-26 | ₹4.90 crore | No (this year) | Mandatory — triggered because FY 2024-25 crossed ₹5 crore |
| FY 2026-27 | Any figure | Irrelevant now | Mandatory — once triggered, it never switches off |
The common mistake is checking only the current year's turnover and concluding "we are under ₹5 crore this year, so we're exempt." The rule looks backward at every year since FY 2017-18, and a single crossing locks the obligation in permanently.
The 30-day IRP reporting rule
A separate time limit runs alongside the threshold rule. Taxpayers with AATO of ₹10 crore or more must report an invoice to the IRP within 30 days of the invoice date — the portal simply rejects reporting attempted after that window. This matters most for businesses that batch-upload invoices weekly or monthly rather than generating the IRN at the point of billing: a month-end backlog can silently age past 30 days and become unreportable. Taxpayers below the ₹10 crore AATO tier can still generate an e-invoice at any time (there is no outer disallowance for them today), but building a habit of same-day or next-day reporting avoids the problem altogether as turnover grows into the higher tier.
Which documents need an IRN — and which don't
E-invoicing covers B2B tax invoices, exports (including deemed exports) and supplies to SEZ units, and the corresponding B2B credit notes and debit notes. It does not cover B2C invoices, delivery challans, bills of supply issued by composition dealers, or financial/commercial credit notes that don't adjust GST liability. A common confusion is with the separate Dynamic QR Code requirement on B2C invoices under Rule 46(r), which applies only to registered persons with turnover above ₹500 crore — a much higher threshold and an entirely different QR code from the IRP-issued one.
Who is exempt regardless of turnover
A short, specifically notified list stays outside e-invoicing even above ₹5 crore AATO:
| Category | Note |
|---|---|
| Banking companies, financial institutions, NBFCs | Registered as such and supplying specified financial services |
| Insurers | Life and general insurance companies |
| Goods Transport Agencies (GTA) | Transporting goods by road under forward charge on that activity |
| Passenger transport service providers | Registered persons supplying passenger transportation service |
| Multiplex cinema operators | Admission to exhibition of cinematograph films on multiplex screens |
| SEZ units | Note: SEZ *developers* are not on this exempt list — only SEZ units |
| Government departments and local authorities | Where notified as such under the CGST Act |
The exemption attaches to the specified activity, not automatically to the whole entity — if an otherwise-exempt business also runs a separate taxable activity above the threshold, that other activity still needs e-invoicing.
What happens when an invoice goes out without an IRN
This is where most of the real-world damage happens, and it rarely shows up as a standalone "e-invoicing" problem — it surfaces as an ITC mismatch or a demand notice weeks or months later:
- The invoice itself is not valid. Rule 48(5) treats a notified person's invoice issued outside the e-invoice process as if no invoice was issued at all.
- Your buyer's input tax credit is exposed. Rule 36(2) requires possession of a valid tax invoice to claim ITC — a document without an IRN doesn't meet that test, and the credit can be reversed at assessment even if it was correctly reflected in GSTR-2B.
- E-way bill generation gets complicated. Where an e-invoice is required, the e-way bill workflow is designed to be generated together with the IRN — trying to move goods on an e-way bill without a matching valid IRN invites scrutiny at a check-post or during transit verification.
- Section 122(1)(i) penalty applies. Because the document is treated as a supply without a valid invoice, the general invoicing penalty kicks in — ₹10,000 or the tax amount involved, whichever is higher — separate from and in addition to any interest on tax short-paid.
See our GST notice reply guide if a mismatch flowing from this has already turned into a DRC-01A or a formal notice — the reply strategy differs depending on whether the department is disputing the supply itself or only the paperwork around it.
Worked example: fixing a defective invoice
A Navi Mumbai trading firm crossed ₹5 crore AATO in FY 2025-26 and, in the first fortnight after the obligation kicked in, its billing software raised three invoices the old way — no IRN — because the ERP integration wasn't switched on in time. The fix path in practice: (a) invoices still within 24 hours of any accidental IRN generation can simply be cancelled on the IRP and re-issued correctly; (b) invoices where no IRN was ever generated cannot be "backfilled" after the fact — the commercially cleanest route is to issue a credit note against the defective invoice through the regular return process and raise a fresh, correctly e-invoiced replacement; (c) the buyer should be informed immediately so they don't carry ITC on the original document into a GSTR-3B filing. Waiting for the buyer to flag the mismatch during their own 2B reconciliation is the slower and more adversarial way to find out.
A practical checklist when you cross ₹5 crore for the first time
- Confirm your PAN-level AATO history for every year since 2017-18, not just the latest year, before concluding e-invoicing doesn't apply.
- Enable the IRP integration in your accounting/ERP software (most mainstream software has a built-in API connector) rather than relying on a manual portal upload — manual upload doesn't scale once volumes grow.
- Fix a same-day or next-day internal SLA for IRN generation so a month-end batch never risks the 30-day window if your AATO is already at or approaching ₹10 crore.
- Brief your billing team on the 24-hour cancellation window — corrections after that require a credit note, not a portal edit.
- Reconcile IRN-generated invoices against your GSTR-1 filing every month; a mismatch here is one of the more common triggers for a departmental query.
- If you run more than one GSTIN under the same PAN, remember the ₹5 crore test is computed on combined turnover — a single registration billing ₹3 crore can still be covered if a sister registration under the same PAN pushes the PAN total past ₹5 crore.
Frequently asked questions
Is e-invoicing mandatory for a business with ₹6 crore turnover in FY 2025-26?
Yes. Once your Aggregate Annual Turnover (AATO) crosses ₹5 crore in any financial year from 2017-18 onwards, e-invoicing under Rule 48(4) of the CGST Rules becomes mandatory from the first day of the next financial year and stays mandatory in every later year, even if turnover later falls below ₹5 crore.
Does e-invoicing apply to B2C sales?
No. E-invoicing under Rule 48(4) applies only to B2B supplies, exports (including deemed exports) and supplies to SEZ units, plus B2B credit and debit notes. B2C invoices are outside IRN requirements, though large retailers separately have a Dynamic QR Code obligation on B2C invoices under Rule 46(r) if their turnover exceeds ₹500 crore — a different rule with a different threshold.
What happens if my supplier sends an invoice without an IRN even though e-invoicing applies to them?
Under Rule 48(5), that document is not treated as a valid tax invoice at all. As the recipient, your input tax credit under Rule 36(2) is at risk because you are not holding a valid invoice. The practical fix is to ask the supplier to cancel the invoice on the IRP (within 24 hours of IRN generation, if it was generated but is defective) and reissue it correctly, or raise the gap in your monthly GSTR-2B reconciliation before you file GSTR-3B.
Can an e-invoice be cancelled or amended after the IRN is generated?
An IRN can be cancelled on the Invoice Registration Portal within 24 hours of generation, provided the corresponding e-way bill (if any) has not already been used for movement of goods. Beyond 24 hours, the invoice itself must be cancelled through the regular GST return process (a credit note) rather than through the IRP — there is no way to edit a reported e-invoice.
Do exporters and SEZ supplies need an e-invoice?
Yes, once the exporter or SEZ-supplying entity crosses the ₹5 crore AATO threshold. Exports and supplies to SEZ units are treated as B2B-equivalent for e-invoicing purposes even though the buyer is outside India or in a SEZ, because the underlying document is still a tax invoice under the CGST Act.
We are a GTA (goods transport agency). Do we need to e-invoice?
Goods transport agencies paying tax under forward charge on transportation of goods by road are on the notified exemption list along with banking companies, financial institutions, NBFCs, insurers, passenger transport service providers and multiplex cinema operators. If you also raise invoices for any non-exempt line of business above the threshold, that separate activity would still attract e-invoicing — check your registration-wise turnover carefully rather than assuming a blanket exemption.
Is there a penalty specifically for not generating an e-invoice?
There is no separate 'e-invoicing penalty' section. Because a non-compliant invoice is deemed not to be a tax invoice under Rule 48(5), it is treated as a supply made without a valid invoice, attracting the general penalty under Section 122(1)(i) of the CGST Act — ₹10,000 or the amount of tax involved, whichever is higher — in addition to the downstream ITC and e-way bill problems described above.
We help businesses crossing the ₹5 crore threshold get their ERP/IRP integration right the first time, and help recipients work through ITC exposure from a supplier's defective invoices.
GST Compliance Services Accounting & Bookkeeping Talk to usThis article reflects the CGST Rules and CBIC notifications as understood on the date above and is for general guidance only; it is not a substitute for advice on your specific facts. E-invoicing notification numbers and thresholds are cited from the primary CBIC notification chain and current practitioner consensus — please confirm the exact date of any rule change against the live CBIC notification before relying on it for a filing decision. See also our related note on ISD vs cross-charge under GST for how invoice-level GST compliance interacts with multi-GSTIN structures.