Tax Service

E-Invoicing Under GST – Latest Updates, Process, and Compliance Guide (2025)

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E-Invoicing Under GST – Latest Updates, Process, and Compliance Guide (2025)

E-invoicing, or electronic invoicing, is a system introduced by the GST Council of India for the electronic authentication of B2B invoices. Under this system, invoices are generated in a standardised format and reported to the Invoice Registration Portal (IRP), which validates them and issues a Unique Invoice Reference Number (IRN) along with a QR code.

It ensures real-time reporting, reduces errors, and makes GST compliance more efficient. Contrary to popular belief, e-invoices are not created directly on the GST portal — instead, they are generated using a company’s accounting or ERP software integrated with the IRP.

Latest Updates on GST E-Invoicing (2025)

  • Applicability Threshold Reduced – From 1 August 2023, businesses with an annual turnover of ₹5 crore or more must generate e-invoices (earlier limit was ₹10 crore).

  • Special Economic Zone (SEZ) Units – SEZ units are exempt from e-invoicing; however, SEZ developers are covered under the provisions.

  • Mandatory for Export Transactions – E-invoicing is now applicable for exports and deemed exports, ensuring seamless ITC claims.

  • B2C Transactions Still Exempt – E-invoicing is not applicable for B2C (business-to-consumer) invoices.

  • Multiple IRPs Introduced – New IRPs have been authorised to improve system capacity and reduce downtime.

  • Auto-Population in GST Returns – Invoice data auto-populates GSTR-1, reducing manual errors.

  • Integration with E-Way Bill – E-invoicing is directly linked with e-way bill generation, avoiding duplication of efforts.

  • QR Code Requirement – Mandatory display of IRP-generated QR code on invoices for verification purposes.

Who Needs to Generate E-Invoices?

As per the latest rules:

  • Mandatory for all businesses with an annual turnover of ₹5 crore or more in any financial year since 2017-18.

  • Applicable for B2B transactions, exports, and certain credit/debit notes.

E-Invoicing Process in India – Step-by-Step

  1. Invoice Generation – Create an invoice in your ERP/accounting software in the prescribed JSON format.

  2. Upload to IRP – Send the invoice data to the Invoice Registration Portal.

  3. Validation & IRN – The IRP verifies the details, generates an IRN and a digitally signed invoice.

  4. QR Code Addition – A QR code is embedded, enabling quick verification of invoice details.

  5. GST & E-Way Bill Integration – Data automatically flows to the GST portal and e-way bill system.

Benefits of E-Invoicing for Businesses

  • GST compliance made easy – Automatic data flow into GSTR-1 returns.

  • Reduces errors – Standardised format prevents mismatches in GST filings.

  • Faster Input Tax Credit – Buyers can claim ITC without delays.

  • Cost savings – Eliminates manual entries and reduces paperwork.

  • Transparency & fraud prevention – Curbs fake invoice creation.

FAQs on GST E-Invoicing

1. From when is e-invoicing mandatory for ₹5 crore turnover?
From 1 August 2023, e-invoicing is mandatory for businesses with a turnover of ₹5 crore or more in any financial year from 2017-18 onwards.

2. Which transactions require e-invoicing?

  • B2B supplies

  • Exports and deemed exports

  • Supplies to SEZ developers

  • Credit and debit notes for the above transactions

3. Which entities are exempt from e-invoicing?

  • SEZ units (not developers)

  • Insurers, banking companies, and financial institutions

  • Goods transport agencies (GTA)

  • Passenger transport services

  • Suppliers of admission to exhibitions, films, etc.

4. Is e-invoicing applicable for B2C sales?
No, B2C invoices are exempt, but businesses may still need to display a dynamic QR code on such invoices.

5. What are the penalties for not issuing an e-invoice?
Penalties include:

  • Up to ₹25,000 per incorrect or missing invoice

  • Disallowance of Input Tax Credit (ITC) for the recipient

6. Does e-invoicing automatically generate an e-way bill?
Yes, key invoice details are automatically shared with the e-way bill system, reducing duplication.

Last-Minute Checklist for Filing ITR for AY 2025–26

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As the deadline for filing Income Tax Returns (ITR) for Assessment Year (AY) 2025–26 approaches, taxpayers—whether individuals, professionals, or business owners—must ensure their returns are filed accurately and on time. Filing your ITR not only ensures compliance but also helps avoid penalties, interest, and scrutiny from the Income Tax Department. Here’s a comprehensive last-minute checklist to guide you through the ITR filing process smoothly:

 

Know Your Due Date

Category of taxpayer
Due Date of Tax Filing
For individuals & HUF (not liable to audit) 15th September 2025
For individuals & Professionals requiring an audit 31st October 2025
For transfer pricing cases 30th November 2025
Updated return (4 years from the end of the relevant Assessment Year) 31st March 2030

 

Always confirm whether an audit is applicable to avoid last-minute confusion.

 

Collect Your Documents

Ensure the following documents are ready:

  • Form 16 from the employer
  • Form 26AS (Tax Credit Statement)
  • AIS & TIS
  • Bank account statements
  • Capital gains statements
  • Loan interest certificates
  • Investment proofs
  • Rental income and property details
  • Business income and expense records

 

ITR Forms for AY 2025–26: Eligibility and Restrictions

ITR Form
Who Can File
Sources of Income Allowed
Who Cannot File
ITR-1 (Sahaj) Resident Individuals (Ordinary Resident) with total income up to ₹50 lakh ✔ Salary / Pension
✔ One House Property
✔ Other Sources (Interest, etc.)
✔ Agricultural income up to ₹5,000		 ❌ HUFs, NRIs
❌ Income > ₹50 lakh
❌ Capital Gains
❌ More than one house property
❌ Business or Profession Income
❌ Director in a company
❌ Foreign Assets or Income
❌Holding unlisted Equity shares
ITR-2 Individuals & HUFs ✔ All income from ITR> 50 Lakh
✔ Capital Gains
✔ More than one house property
✔ Foreign Income or Assets✔Director in a company✔Holding unlisted Equity shares✔ Agriculture income > ₹5,000

✔ Crypto Income (if reported as capital gains)

 ❌ Income from Business or Profession under regular computation (non-presumptive)
ITR-3 Individuals & HUFs having business/ profession income ✔ All income sources from ITR-2
✔ Income from Business or Profession (including presumptive, partnership share, etc.), ✔ Crypto Income (if reported as business income)                             ✔ As a partner in the firm		 ❌ Entities other than individuals or HUFs
ITR-4 (Sugam) Resident Individuals, HUFs, and Firms (other than LLP) opting for presumptive taxation ✔Every income from ITR-1
✔ Presumptive income
✔ Resident Individual and HUF having total income ≤ ₹50 lakh		 ❌ Income > ₹50 lakh

❌ Income from Capital Gains
❌ More than one house property
❌ Income from lottery/racehorses
❌ Foreign Income or Assets
❌ Director in a company or holding unlisted shares
❌ Firms requiring an audit
❌ Not opting for presumptive scheme,
❌Holding unlisted Equity shares during the F.Y.

Verify Tax Credits with Form 26AS & AIS

Reconcile the TDS entries in Form 26AS and AIS with your records to avoid mismatches.

Report All Income Sources

  • Interest from savings and FDs
  • Capital gains
  • Freelance income
  • Foreign income or assets

Claim All Eligible Deductions

Section
Deduction Type
Details
80C LIC, PPF, ELSS Maximum deduction of ₹1.5 lakh per financial year on specified investments/savings.
80D Medical Insurance Dedication up to ₹25,000 (non-senior citizens) and ₹50,000 (senior citizens).
80G Donations Dedication for donations to specified funds/charitable institutions (50% or 100%, with/without restriction).
24(b) Housing Loan Interest Interest deduction up to ₹2 lakh per annum for self-occupied property.
80E Education Loan Interest 100% deduction on interest for up to 8 years (no upper limit on amount).

 

Check Advance Tax / Self-Assessment Tax

Ensure advance/self-assessment tax is paid if applicable.

Verify Bank Account Details

Check the correct account number and IFSC for refund processing.

File and E-Verify the Return

Complete e-verification within 30 days via Aadhaar OTP, net banking, or by sending ITR-V to CPC.

Keep Acknowledgement Copy Safe

Save the ITR-V acknowledgement for future references like visa, loans, or compliance.

ITR Forms Overview

Form No.
Applicable For
ITR-1 Salaried individuals with income up to ₹50L
ITR-2 Individuals with capital gains, foreign income
ITR-3 Professionals & business owners
ITR-4 Presumptive income scheme (44ADA/44AE)

 

Penalties for Late Filing

  • Late fee up to ₹5,000 u/s 234F (₹1,000 if income < ₹5L)
  • Interest on unpaid tax at the rate of 1% per month u/s 234A.
  • Losses can’t be carried forward if the return is not filed in time.

Capital Gains Tax in India: Types, Rates, Calculation Methods, Exemptions, and Ways to Save Tax

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Section 115BAA: New Tax Rates for Domestic Companies

Capital gains tax is a levy on the profit realized from the sale of non-inventory assets, such as stocks, bonds, real estate, and other investments. In India, the Union Budget 2024 introduced significant changes to the capital gains tax framework, aiming to simplify the tax structure and promote long-term investments.​

 

Key Changes Introduced in Budget 2024:

 

Uniform Long-Term Capital Gains (LTCG) Tax Rate:

A standardised LTCG tax rate of 12.5% has been established across all asset classes, replacing the previous varied rates.

 

Adjustment in Short-Term Capital Gains (STCG) Tax Rate:

The STCG tax rate on equity-related investments has been increased from 15% to 20%. ​

 

Modification of Holding Periods:

The holding period to qualify for LTCG has been standardised:​

  • Listed securities: 12 months
  • All other assets: 24 months

 

Removal of Indexation Benefits:

The indexation benefit, which adjusted the purchase price of assets for inflation to reduce taxable gains, has been removed for real estate and other assets. ​

 

Increased Exemption Limit for LTCG:

The exemption limit for LTCG on equity-related investments has been raised from ₹1 lakh to ₹1.25 lakh.

1. What is Capital Gains Tax?

Capital gains tax is imposed on the profit earned from the sale of capital assets such as property, stocks, bonds, or mutual funds. The gain is calculated as the difference between the sale price and the purchase price of the asset. These gains are categorized based on the holding period of the asset:​

2. Types of Capital Gains

Short-Term Capital Gains (STCG)

STCG arises when assets are sold within a specified short holding period:​

  • Listed Equity Shares and Equity-Oriented Mutual Funds: Held for less than 12 months.
  • Other Assets (e.g., real estate, unlisted shares): Held for less than 24 months.​

 

Long-Term Capital Gains (LTCG)

LTCG applies when assets are held beyond the short-term holding period:​

  • Listed Equity Shares and Equity-Oriented Mutual Funds: Held for more than 12 months.
  • Other Assets: Held for more than 24 months.​

    3. Capital Gains Tax Rates (Post-Budget 2024)

    The Union Budget 2024 introduced the following changes to capital gains tax rates:​

    Short-Term Capital Gains (STCG):
    • Listed Equity Shares and Equity-Oriented Mutual Funds: Taxed at 20% (increased from 15%).
    • Other Assets: Taxed at applicable slab rates or 30%, depending on the asset type.

     

    Long-Term Capital Gains (LTCG):
    • All Assets: Taxed at a uniform rate of 12.5%, replacing the previous varied rates.​

    Note: Previously, LTCG calculations allowed for indexation benefits to adjust the purchase price for inflation. However, the Budget 2024 has removed indexation benefits for most assets.​

     

    5. Exemptions on Capital Gains

    Certain exemptions are available under the Income Tax Act to reduce capital gains tax liability:​

    • Section 54: Exemption on LTCG from the sale of a residential property if the proceeds are reinvested in another residential property.
    • Section 54F: Exemption on LTCG from the sale of any asset other than a residential property if the net consideration is invested in a residential property.
    • Section 54EC: Exemption on LTCG if the gains are invested in specified bonds within six months of the sale.​

    It’s important to note that while these exemptions continue, the removal of indexation benefits may affect the overall tax liability.​

    6. Strategies to Save Tax on Capital Gains

    • Invest in Capital Gains Bonds: Utilize Section 54EC by investing in specified bonds to claim exemption.
    • Reinvest in Residential Property: Under Sections 54 and 54F, reinvesting the proceeds can provide tax relief.
    • Timing the Sale: Holding assets beyond the specified period to qualify for LTCG can result in lower tax rates.
    • Set Off Capital Losses: Adjust capital losses against capital gains to reduce taxable income.

    Utilize Exemption Limits: For LTCG on equity shares and mutual funds, the first ₹1.25 lakh of gains are exempt from tax.​

    Vendor/Third Party/Supplier Compliance Strategies

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    Supplier Compliance Strategies

    Vendor/Third Party/Supplier Compliance Strategies

    In today’s globalized business landscape, organizations often rely on a network of vendors/third party and suppliers to meet their operational needs. While outsourcing tasks to vendors/third parties/suppliers can streamline processes and reduce costs, it also brings about a significant responsibility – ensuring vendor/third party and supplier’s compliance with various laws and regulations to effectively manage risk assessment. In this blog, we will delve into the crucial aspects of vendor compliance, focusing on vendor/Third Party/ Supplier’s selection procedures, vendor/Supplier’s data records maintenance, vendor registration with labour offices, and vendor compliance audits with respect to laws like the Contract Labor Regulation and Abolition Act (CLRA).

     

    1. Vendor/Third Party/ Supplier Selection Procedures

     Choosing the right vendors/suppliers is the cornerstone of effective vendor compliance management. The vendor selection process should be thorough and systematic. Here are some key steps to consider:

    • Needs Assessment: Start by identifying your organization’s specific needs and requirements. What services or products are you outsourcing? What are the critical quality, cost, and timeline considerations?
    • Vendor/Supplier/Third party Evaluation Criteria: Develop a set of criteria for evaluating potential vendors/suppliers. This might include factors such as financial stability, past performance, industry reputation, compliance history, and capacity to meet your needs.
    • Request for Proposals (RFP): Create an RFP that outlines your requirements and expectations. Share this document with potential vendors to solicit their proposals.
    • Due Diligence: Conduct thorough due diligence on vendors, including background checks, reference checks, and financial analysis. Look into their compliance with labour laws, tax regulations, and other relevant legislation.
    • Vendor Agreements: Draft clear and comprehensive vendor agreements that outline all terms, including compliance requirements, service-level agreements, and dispute-resolution mechanisms.
    • Risk Mitigation Strategies: Risk assessment helps organizations develop and implement risk mitigation strategies as part of the vendor/third-party/supplier selection process. This may involve conducting additional due diligence, negotiating contract terms to address specific risks, or implementing monitoring mechanisms to ensure ongoing compliance.

     

     

    1. Vendor/Third Party/Supplier Data Records Maintenance

    Maintaining accurate and up-to-date vendor/supplier/third-party data records is essential for vendor compliance. These records should include:

    • Vendor Information: Maintain a database of vendor contact details, tax identification numbers, and legal entity information.
    • Contracts and Agreements: Keep copies of all vendor agreements, including any updates or amendments.
    • Insurance and Certifications: Verify that vendors have the necessary insurance coverage and certifications to operate legally in their industry.
    • Compliance Documentation: Maintain records of vendor compliance with labour laws, safety regulations, and any other relevant legal requirements to assist in risk assessment.
    • Payment Records: Keep records of all payments made to vendors/third parties or suppliers, including invoices and receipts.

    Regularly reviewing and updating these records ensures a clear understanding of your vendors/suppliers’ compliance status for risk assessment at all times.

     

    1. Vendor Registration with Labor Office

    In many regions, including India, the registration of vendors with labour offices is a mandatory requirement under labour laws like the Contract Labor Regulation and Abolition Act (CLRA). This registration process typically involves the following steps:

    • Application Submission: Vendors/third parties or suppliers must apply for registration to the local labour office, providing details about their business, workforce, and operations.
    • Inspection and Verification: Labor officials may conduct inspections to verify the information provided in the application and perform due diligence risk assessment. This includes checking for compliance with labour laws, health and safety standards, and wage regulations.
    • Issuance of Registration Certificate: Upon successful verification, the labour office issues a registration certificate to the vendor/supplier/third party. This certificate serves as proof of compliance with labour laws and regulations.
    • Renewals and Updates: Vendors must renew their registration periodically and inform the labour office of any changes in their operations or workforce.

     

    1. Vendor/Third party/Supplier Compliance Audit with Respect to Laws like CLRA

    Regular vendor compliance audits are essential to ensure that vendors adhere to labour laws like the CLRA. These audits involve a systematic review of vendor operations, due diligence and risk assessment compliance records. Here’s how to conduct an effective vendor/supplier compliance audit:

    • Planning and Scope Definition: Define the scope of the audit, including the specific laws and regulations to be assessed. Develop an audit plan that outlines the audit’s objectives, methodology, and timeline.
    • Document Review: Examine vendor/third party or supplier’s records, contracts, agreements, payroll records, and compliance documentation to assess compliance with labour laws and conduct a risk assessment.
    • On-Site Inspections: Conduct on-site inspections of vendor/third-party/ supplier’s facilities to verify compliance with safety, health, and working condition standards.
    • Interviews and Discussions: Interview vendor/supplier’s representatives and workers to gain insights into their understanding of labour laws and their working conditions.
    • Report and Remediation: Prepare a detailed audit report highlighting compliance strengths and weaknesses through due diligence. Work with vendors to address any non-compliance issues and establish corrective action plans, as part of risk assessment strategy.
    • Follow-up and Monitoring: Regularly monitor vendor compliance, conduct follow-up audits as needed, and ensure that corrective actions are implemented.

    Vendor/supplier compliance is a multifaceted process that requires careful vendor/ third party or supplier selection, diligent record-keeping, and proactive adherence to labour laws and regulations, incorporating due diligence and risk assessment. By following robust vendor/supplier selection procedures, maintaining accurate vendor/supplier data records, ensuring vendor/supplier/third party registration with labour offices, and conducting regular compliance audits, organizations can mitigate risks, enhance vendor/supplier relationships, and uphold their legal and ethical responsibilities. In today’s competitive business environment, proactive vendor/supplier compliance management is not just a choice; it’s a necessity for sustainable and responsible business operations.

     

    Section 115BAA: New Tax Rates for Domestic Companies

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    Section 115BAA: New Tax Rates for Domestic Companies

     

    The Government of India introduced Section 115BAA through the Taxation (Amendment) Ordinance 2019 on September 20, 2019. This ordinance amended the Income Tax Act, 1961, bringing significant changes such as a reduction in the corporate tax rate for domestic and manufacturing companies. Additionally, the MAT rate was lowered from 18.5% to 15%.

     

    Section 115BAA: – Concessional Tax Rates for Domestic Companies

    Domestic companies were given the option to pay tax at a lower rate of 22% (plus applicable surcharge and cess) starting from the financial year 2019-20, provided they do not claim certain deductions or incentives. This effectively brings the tax rate to around 25.17%, including surcharge and cess.

              Section     Applicable on                          Tax Rate
     

    115BAA

    		  

    Domestic Company

     

    		 Tax Rate  22%
    Surcharge (Compulsory)  10%
    Cess  4%
    25.168%

     

    The new Section 115BAA has been added to the Income Tax Act, 1961, to provide domestic companies with the benefit of a reduced corporate tax rate. This section allows domestic companies to opt for a concessional tax rate resulting in an effective tax rate of 25.17% starting from the FY 2019-20 (AY 2020-21) onwards, provided they meet certain specified conditions. Companies that choose this option are not required to pay tax under the Minimum Alternate Tax (MAT) provisions.

    Eligibility Criteria for Claiming the Concessional Tax Rate

    The following Benefits/Deductions will not be available under section 115BAA

     

    Section Benefits/Deductions not Allowed
    10AA Deductions for the units established in Special Economic Zone.
    32/32AD Additional Depreciation and Investment Allowance on New Plant and Machinery.
    33AB Deduction for Tea/Coffee/Rubber Business
    33ABA Deduction for Petroleum and Natural Gas Business
    35 Deductions for Scientific Research Expenditure
    35AD Deductions for Expenditure on Specified Business
    35CCC Deduction of Expenses Incurred on Agriculture Extension Project.
    35CCD Deduction of Expenses incurred by a Company on Skill Development Projects.
    Chapter VI-A Deductions which are allowed in respect of certain incomes (Except Section 80JJA: Employment of New Employee and 80M: Inter Corporate Dividend)
    Other A set off of any loss carried forward or depreciation from earlier years.

     

    Time Limit to opt for Taxation under Section 115BAA

    Companies must opt for taxation under Section 115BAA by the due date of filing income tax returns, typically the 30th of September of the assessment year.

    Frequently Asked Questions

    • How does a domestic company exercise the option under section 115BAA?
      The exercise of Section 115BAA shall be completed by electronically submitting details in Form No. 10-IC to the principal officer, either through a digital signature or electronic verification code.
    • Can a Company Opt out of this section?
      Domestic companies       that are not immediately inclined to avail themselves of this reduced rate can choose to do so after the expiration of their tax holiday period or any mentioned exemptions/incentives.
    • If a taxpayer chooses to exercise the option under Section 115BAA, can they still utilize MAT credits?
      Domestic companies choosing Section 115BAA won’t be eligible to claim MAT credits for taxes paid under MAT during their tax holiday period.
    • What is the Tax Holiday Period?
      A tax holiday refers to a duration wherein an individual or a company is permitted to pay either no tax or a reduced amount of tax compared to the standard rate.
    • Does Section 115BAA supersede all other specific sections of Chapter XII, except for Sections 115BA and 115BAB?
      No, section 115BAA does not override the other sections. For Example, the incomes of specific nature covered under Chapter XII, such as STCG (Section 111A) at 15%, LTCG (Section 112) at 10% or 20%, Section 112A at 10%, dividends from foreign companies (Section 115BBDA) at 15%, etc., be subject to tax at rates mentioned in those sections.
    • Can a foreign company choose to avail itself of the provisions of Section 115BAA?
      Foreign companies cannot opt for the tax rates under Section 115BAA