If your manufacturing business has a turnover above ₹5 crore and you're still generating invoices manually or through Tally without e-invoice registration, you are non-compliant — and your buyers may be losing their Input Tax Credit (ITC) because of it.

Here's exactly what e-invoicing is, who it applies to, and how the process works step by step.

What is E-Invoicing Under GST?

E-invoicing (electronic invoicing) is not about generating PDFs. It is a government-mandated system where every B2B invoice above a certain value must be registered on the Invoice Registration Portal (IRP) before it is considered valid for GST purposes.

The IRP is maintained by the National Informatics Centre (NIC) and is accessible at einvoice1.gst.gov.in.

When you successfully register an invoice, the IRP:

Validates your GSTIN and the buyer's GSTIN
Generates a unique IRN (Invoice Reference Number) — a 64-character hash
Generates a QR code with key invoice details
Returns the digitally signed invoice back to you

The invoice is only valid for GST purposes once it has an IRN.

Who Must Comply in 2025?

E-invoicing has been rolled out in phases since October 2020:

Phase	Turnover Threshold	Effective From
1	Above ₹500 crore	Oct 2020
2	Above ₹100 crore	Jan 2021
3	Above ₹50 crore	Apr 2021
4	Above ₹20 crore	Apr 2022
5	Above ₹10 crore	Oct 2022
6	Above ₹5 crore	Aug 2023

As of 2025: All businesses with aggregate turnover above ₹5 crore must generate e-invoices for B2B transactions.

This includes most medium-sized manufacturers — garment exporters in Tirupur, auto ancillary units in Pune, engineering goods units in Ludhiana, textile mills in Erode and Surat.

What Transactions Require E-Invoice?

E-invoicing applies to:

B2B invoices (business-to-business)
B2G invoices (business-to-government)
Exports and SEZ supplies
Credit notes and debit notes related to the above

E-invoicing does not apply to:

B2C invoices (below ₹2.5 lakh for B2C the QR code is needed, not full e-invoice)
Non-GST supplies
Exempt supplies
SEZ units (as recipient, not supplier)

Step-by-Step: The E-Invoicing Process for Manufacturers

Step 1: Create the Invoice in Your System

Before submission, your invoice must have all mandatory fields:

Supplier GSTIN and legal name
Buyer GSTIN, legal name, and address
Invoice number (unique, sequential)
Invoice date
HSN code for each line item
Quantity, unit, value, tax rate, and tax amount
Place of supply (state code)
Whether it's an export, with or without payment, LUT/Bond details if applicable

Step 2: Submit Invoice Data to the IRP

Your software sends this data as a JSON payload to the IRP API. This happens either:

Direct API integration — your ERP/accounting software has built-in IRP connectivity
Via a GSP — a GST Suvidha Provider (GSP) acts as an intermediary (useful if your software doesn't have direct integration)

Most modern ERP systems (FactoStack, Tally Prime, Zoho Books, etc.) handle the IRP API call automatically when you approve an invoice.

Step 3: IRP Generates the IRN

The IRP validates:

That both GSTINs are active
That the invoice number hasn't been used before
That the financial year and tax details are consistent

On success, the IRP generates the 64-character IRN and signs the invoice JSON with its private key.

Step 4: Receive the Signed Invoice Back

Your software receives the IRP response containing:

The IRN (64-character string)
Signed invoice JSON
QR code (base64-encoded image)
Acknowledgment number and date

Your software stores this with the invoice record.

Step 5: Print and Share with Buyer

The printed or PDF invoice must include:

The QR code (scannable for verification)
The IRN (optional to print, but recommended)
Acknowledgment number

The buyer can verify the invoice by scanning the QR code using the NIC QR code verification app or the GST portal.

How E-Invoicing Affects Your Tally Workflow

If you use Tally Prime (latest version), Tally can submit e-invoices directly from within the software. This works if Tally is your primary invoicing tool.

If you use an operations system like FactoStack for invoicing:

FactoStack submits the e-invoice to IRP directly when you approve the invoice
The IRN and QR code are attached to the FactoStack invoice
The same invoice (with IRN) is then exported to Tally for accounting

This means you don't need to generate the e-invoice twice. One submission from your operations system handles compliance, and the accounting entry flows to Tally automatically.

Non-Compliance Penalties

The GST Act provides for penalties under Section 122:

A tax invoice without an IRN (when required) is not a valid tax document
The buyer cannot claim ITC on such an invoice — this creates enormous pressure on your buyers to reject invoices without IRN
The supplier faces penalties of ₹10,000 per invoice or 100% of the tax, whichever is higher

In practice, most penalties are applied during GST audits. But the ITC loss to your buyers is an immediate commercial consequence — buyers increasingly won't pay against an invoice without a valid IRN.

What is E-Invoice for Manufacturers in India? A Complete Guide (2025)