When e-invoicing becomes mandatory for your business
E-invoicing starts at ₹5 crore aggregate turnover. How that figure is calculated, who is exempt, and what changes the day you cross it.
4 min read
A lot of small businesses in India believe e-invoicing is something they already have to do, and spend money on software to comply with a rule that does not apply to them. Others cross the threshold without noticing and carry on issuing ordinary invoices that are, from that point, not valid.
Both mistakes come from the same place: nobody explains clearly what the number is or how it is measured.
What e-invoicing actually is#
It is not emailing a PDF. A business issuing ordinary invoices electronically is not doing e-invoicing in the GST sense.
E-invoicing means reporting the invoice to a government Invoice Registration Portal before it goes to the customer. The portal validates it, returns an Invoice Reference Number and a signed QR code, and only then is the document a valid tax invoice. An invoice that should have been reported and was not is not merely late: it is not a tax invoice, and your customer's input credit on it is at risk.
That is why the threshold matters. Below it you issue ordinary invoices and nothing is missing. Above it, every B2B invoice has to go through the portal first.
The number#
₹5 crore aggregate turnover.
Three things about how that figure is measured catch people out.
It is PAN-based, not GSTIN-based. If you hold registrations in three states under one PAN, you add all three together. Businesses with multi-state registrations often check one state's turnover, see a comfortable figure, and miss that the combined number crossed long ago.
It is all-India and includes more than you expect. Aggregate turnover covers taxable supplies, exempt supplies, exports and inter-state supplies to your own other registrations. Exports count. Exempt supplies count. It is a wider measure than "revenue I raised tax invoices for".
It looks backwards, at any financial year since GST began. If your turnover crossed ₹5 crore in any financial year from 2017-18 onwards, you are in scope, and a quieter year afterwards does not take you back out.
So the question is not "what did we bill last year". It is "has the combined all-India turnover under this PAN ever crossed ₹5 crore in any year since GST started".
What it applies to, and what it does not#
E-invoicing applies to B2B supplies, supplies to government, exports and deemed exports. It does not apply to your B2C invoices.
For a business selling to consumers, this is the part that saves the most wasted effort. A retail or direct-to-consumer business over the threshold still reports its B2B invoices but issues ordinary invoices to consumers.
Certain categories are exempt regardless of turnover: SEZ units, banks and insurers and other financial institutions including NBFCs, goods transport agencies, passenger transport services, and admission to cinematograph film exhibition in multiplexes. If you are in one of those, check your own position rather than assuming the general rule.
What changes the day you cross#
Three things, and the first is the one that hurts.
Your invoice numbering becomes externally validated. The portal rejects duplicates. A numbering scheme that quietly reused a number, or that had gaps from failed transactions, stops being a private untidiness and becomes a rejection at the point of issue.
Your invoicing system needs to talk to the portal. Either through a GSP, directly via API, or by uploading. Whatever you use has to be able to do it, and the time to find out it cannot is not the week you cross.
Larger taxpayers also face a reporting time limit. Beyond a higher turnover threshold, e-invoices must be reported to the portal within a fixed window of the invoice date rather than whenever convenient. If you are approaching the larger thresholds, confirm the current window and the turnover it applies from with your CA, because this one has moved more than once.
If you are under the threshold#
You are not required to do any of this. But two habits now will save you a painful migration later.
Keep your invoice numbering clean from the start. Consecutive, unique within the financial year, at most 16 characters, no gaps. If you cross the threshold with four years of messy numbering behind you, you do not get to start again.
Capture your customer's GSTIN and state properly. E-invoicing validates the recipient's GSTIN against the portal. A field that has been filled in loosely for years becomes a daily source of rejections.
Neither costs anything today. Both are expensive to retrofit.
The one-line answer#
If your combined all-India turnover under one PAN has crossed ₹5 crore in any financial year since 2017-18, e-invoicing applies to your B2B invoices. If it has not, it does not, and no software vendor should tell you otherwise.
Siddarth Reddy Desai is the founder of TarkHQ LLP, Bengaluru, and builds MantriCEM: connected CRM, ERP and marketing for businesses, freelancers and agencies.
This is general information, not tax advice. Thresholds, exemptions and reporting windows have changed several times since 2020 and can change again. Confirm your own position with your CA.