GST and invoicing in India (2026): rates, IRN and e-way bill

India’s Goods and Services Tax (GST) has been in place since 2017 and changed shape in September 2025, when the GST Council cut the rate structure to two main slabs. GST is shared between the Centre and the states: the Central Board of Indirect Taxes and Customs (CBIC) and each state’s tax department administer it, and registrations, returns and payments all run through the GST portal. On top of the returns, many businesses must register their invoices for an IRN and generate e-way bills for goods in transit. This guide covers what a small business needs to know in 2026. Figures are as of October 2026.

GST at a glance: CGST, SGST and IGST

Which GST you charge depends on the place of supply:

The rates since 22 September 2025. At its 56th meeting on 3 September 2025, the GST Council replaced the four-slab structure with what it calls a “simple tax”:

Pan masala, gutkha, cigarettes and other tobacco products did not move to the new rates on 22 September 2025 and are taxed under separate rules. Exports are zero-rated, so you can claim refunds of the related input tax.

Who must register and when

Some businesses must register whatever their turnover, and each registration is per state. You get a GSTIN, which goes on every invoice.

• Simplified registration: since 1 November 2025, low-risk applicants, and applicants who expect to pass on no more than ₹2.5 lakh of input tax credit a month to registered buyers, can get registration automatically within three working days (rule 14A of the CGST Rules).
• Composition scheme: businesses with turnover up to ₹1.5 crore can pay GST at a lower rate on turnover and file quarterly, but they cannot claim input tax credit or charge GST on invoices; they issue a bill of supply instead.

Returns and payment

• Businesses with aggregate turnover up to ₹5 crore can choose the QRMP scheme and file quarterly returns instead of monthly ones.
• The Invoice Management System (IMS), live since October 2024, lets you accept, reject or keep pending each invoice your suppliers report, before your input tax credit statement (GSTR-2B) is generated.
• Upcoming: at its 57th meeting on 8 October 2026, the GST Council recommended a new way to correct liability and input tax credit in returns from the April 2027 return, an optional annual-return, quarterly-payment scheme for B2C businesses with turnover up to ₹5 crore (approved in principle), the removal of arrest powers and a lower general penalty. Most of these need changes to the law or rules before they apply.

GST invoices: what they must show

A tax invoice under the CGST Rules must show:

• invoice number and date,
• your name, address and GSTIN,
• your customer’s name, billing and shipping address, and GSTIN if registered,
• the place of supply (state name and code),
• the HSN code for goods or SAC for services,
• description, quantity and unit,
• taxable value and any discount,
• the GST rate and the amount of CGST, SGST/UTGST or IGST,
• whether tax is payable under reverse charge, and
• your signature or digital signature.

For an unregistered customer and an invoice above ₹50,000, add the customer’s name and address, the delivery address and the state name and code.

• When: for goods, before or at the time of removal; for services, within 30 days of supply.
• Copies: paper invoices are made out in three copies for goods and two for services.
• Exempt supplies and composition dealers: issue a bill of supply, without tax.
• Corrections: a credit note reduces the taxable value or tax (returned goods, deficient services, a price cut), and a debit note increases it. Both are declared in your returns, and section 34 of the CGST Act sets a time limit for declaring credit notes, so do not leave year-end corrections late.

E-invoicing (IRN) and e-way bills

E-invoice: reporting to the Invoice Registration Portal

• Who: businesses whose aggregate annual turnover (AATO) is above ₹5 crore must report their B2B invoices, credit and debit notes and exports to the Invoice Registration Portal (IRP). The threshold was lowered to this level on 1 August 2023.
• How it works: the IRP validates the invoice and returns an Invoice Reference Number (IRN) and a digitally signed QR code for the invoice you send.
• 30-day limit: since 1 April 2025, businesses with AATO of ₹10 crore and above must report each invoice within 30 days of the invoice date.
• Not covered: B2C invoices (though certain large businesses must print a dynamic QR code on them), and some sectors such as banks, insurers, NBFCs, goods transport agencies, passenger transport, multiplex cinemas, SEZ units and government departments.

E-way bill for goods in transit

• Needed when goods worth more than ₹50,000 are moved between states; each state sets its own limit for movements within it.
• Part A holds the invoice and consignment details, Part B the vehicle; validity starts when Part B is first filled in and runs one day per 200 km for regular cargo.
• Since 1 January 2025, an e-way bill can only be generated for documents up to 180 days old, and extensions stop at 360 days from generation. Two-factor authentication has been mandatory since 1 April 2025.

Worked example in rupees

A registered trader in Maharashtra sells goods taxed at 18%:

Output tax for the month: ₹9,000 + ₹9,000 + ₹18,000 = ₹36,000. Input tax credit: ₹21,600. GST payable in cash: ₹36,000 − ₹21,600 = ₹14,400, with the IGST credit set off against IGST, CGST and SGST in the order the law sets. At 5% the same ₹1,00,000 sale would carry ₹2,500 CGST and ₹2,500 SGST.

Paying late and getting paid late

• Late GST: interest is charged on tax paid after the due date, and late fees apply to late returns, so file GSTR-3B even in a month with little to report.
• Paying small suppliers: under the MSMED Act 2006, a buyer must pay a registered micro or small enterprise by the agreed date and within 45 days at most; if it pays late, it owes compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India. For income tax, amounts owed to MSMEs are generally deductible only when actually paid.

If you are an MSE supplier, put the payment term in your contract and on the invoice. Our guide on getting paid faster covers the practical follow-up.

Common mistakes

1. 1Charging the wrong type of GST: CGST and SGST on a sale to another state, or IGST on a sale within your own state.
2. 2Using the old 12% or 28% rates on goods that moved to 5%, 18% or 40% on 22 September 2025.
3. 3Not generating an IRN once your turnover passes ₹5 crore, or reporting after 30 days when you are at ₹10 crore and above.
4. 4Moving goods worth more than ₹50,000 without an e-way bill, or with one based on a document older than 180 days.
5. 5Ignoring supplier invoices in IMS, which can cost you input tax credit.
6. 6Leaving out the place of supply or the HSN/SAC code on the invoice.

How Clientlly helps

Clientlly numbers your invoices sequentially per series and puts India’s GST rates on every invoice, with credit notes linked to the original invoice. You can invoice export customers in multiple currencies, send the PDF in your client’s language with a card payment link, see when it was opened and let automatic reminders go out 3, 14 and 30 days after the due date. Scanned receipts have the tax read automatically, sales and purchase tax books are kept per rate, including exports and reverse charge, and tax reports with Excel and PDF exports are ready for you and your chartered accountant. You can import clients, suppliers, products and opening balances from Excel or CSV. See invoicing and accounting.

Clientlly is not connected to the Invoice Registration Portal or the e-way bill system. If you need IRNs or e-way bills, generate them on the government portals or through a solution integrated with them.