GST E-Invoicing Reforms Effective April 1, 2025

Context:

On March 31, 2025, The Hindu published an article detailing the evolution and updates to India’s GST e-invoicing system, spotlighting significant changes effective from April 1, 2025. Initially introduced in 2020, this system aims to streamline tax compliance and curb evasion, with new rules expanding its scope and tightening deadlines, offering critical insights into fiscal policy and digital governance.

Key Information in Points:

• Introduction of E-Invoicing: The GST Council rolled out the e-invoicing ecosystem in phases from October 1, 2020, to report business-to-business (B2B) invoices on the GST portal.
• Standardized Format: A uniform e-invoice format was established after consultations with trade bodies and the Institute of Chartered Accountants of India, ensuring consistency nationwide.
• Evolution of Rules: Since its inception, e-invoicing rules have been periodically updated to enhance compliance and address gaps.
• Previous Flexibility: Until recently, there was no strict deadline for reporting invoices, leading to delays, discrepancies in Input Tax Credit (ITC) claims, and compliance issues.
• New 30-Day Rule: From April 1, 2025, invoices must be reported within 30 days; late submissions will be rejected by Invoice Registration Portals (IRPs), potentially incurring penalties.
• Mandatory Two-Factor Authentication (2FA): Effective April 1, 2025, all taxpayers, regardless of turnover, must use 2FA for e-invoice and e-way bill generation to bolster security.
• Process Overview: Taxpayers generate invoices via their accounting/ERP systems, report them to the IRP, and receive a signed e-invoice with a unique Invoice Reference Number (IRN) and QR code.
• Invoice Validity: A GST invoice is valid only with a valid IRN, ensuring authenticity and traceability.
• Benefits for Businesses: E-invoicing auto-populates GST return and e-way bill forms, reducing manual effort, disputes, processing costs, and improving payment cycles.
• Reporting Options: Multiple tools are available—API interface, mobile app, GST e-Invoice Preparing and Printing (GePP) tool (online/offline), and bulk upload—offering flexibility to taxpayers.
• Phased Expansion: Initially mandatory for businesses with turnover above ₹500 crore (2020), it extended to ₹100 crore (2021), ₹50 crore (2021), ₹20 crore (2022), ₹10 crore (2022), and ₹5 crore (2023).
• Tightened Timeline: From November 1, 2023, businesses with turnover above ₹100 crore had to report within 30 days; this now extends to those above ₹10 crore from April 1, 2025.
• Compliance Enforcement: The in-built IRP validation rejects invoices beyond the 30-day window, aiming to curb tax evasion and ensure timely reporting.

Key Terms:

• GST E-Invoicing: A system for electronically reporting and authenticating B2B invoices on the GST portal.
• Invoice Reference Number (IRN): A unique identifier assigned to an e-invoice by the IRP.
• Input Tax Credit (ITC): Tax paid on inputs that businesses can offset against output tax liability.
• Invoice Registration Portal (IRP): The government platform for validating and signing e-invoices.
• Two-Factor Authentication (2FA): A security process requiring two verification steps for access.
• Business-to-Business (B2B): Transactions between two businesses, the focus of e-invoicing.
• QR Code: A scannable code on e-invoices containing key transaction details.

Link To The Original Article – https://www.thehindu.com/business/explained-what-is-gst-e-invoicing-whats-changed-from-april-1-2025/article69395361.ece