The Central Board of Direct Taxes (CBDT) has recently introduced Section 234E under the Income Tax Act, adding a new layer of compliance related to e-invoicing requirements. With the push towards digitization and transparency, businesses are now expected to report their invoices to the designated government portal in a timely manner. Section 234E aims to penalize delay or non-reporting of e-invoices.
Let’s explore what this new provision means, who it affects, and how businesses can avoid penalties.
Section 234E is a newly notified provision under the Income Tax Act that empowers the tax authorities to levy penalties for delays in uploading e-invoices to the designated Invoice Registration Portal (IRP). This marks a significant shift in the compliance framework, where earlier penalties for GST e-invoice delays were loosely enforced.
Now, with this direct amendment under the Income Tax framework, non-compliance can lead to monetary penalties, even without prosecution.
The purpose of introducing Section 234E is to:
Enforce stricter compliance with the e-invoicing mandate.
Ensure real-time tracking of B2B transactions.
Prevent tax evasion and improve invoice transparency.
Create a unified penalty structure across taxpayers.
This section brings consistency and clarity regarding penalties for e-invoice-related violations.
Section 234E is applicable to all registered businesses who are required to comply with e-invoicing norms as per the GST law. Currently, e-invoicing is mandatory for businesses with aggregate turnover exceeding ₹5 crores in a financial year.
If such businesses fail to upload their invoices to the IRP within the prescribed timeline, Section 234E penalties may apply.
Under Section 234E:
A penalty of ₹100 per day per invoice is levied for non-compliance.
The maximum penalty can go up to ₹1,00,000 per instance.
This penalty is in addition to GST penalties that may be imposed under Section 122 of the CGST Act.
This means delayed reporting of even a few high-value invoices can invite substantial fines, making it imperative for businesses to comply strictly with e-invoice timelines.
As per the latest notification, Section 234E came into effect from July 1, 2025. All e-invoices generated after this date must be uploaded to the IRP within the mandated timeframe.
The introduction of this section significantly increases the risk for non-compliant businesses. Here's how:
Accounting and ERP teams must adapt quickly to ensure real-time e-invoice generation.
Businesses relying on manual processes or outdated billing software may face challenges.
Increased workload on compliance officers to avoid daily penalties.
To prevent errors, it is highly recommended that businesses automate their invoice reporting systems using GST-compliant ERP tools.
Implement Real-Time Invoicing Tools
Use GST-compliant accounting software integrated with the IRP.
Regular Staff Training
Ensure your accounts and billing team understand the timelines and formats required for e-invoice uploads.
Set Internal Deadlines
Avoid last-minute uploads; set a buffer of 24-48 hours to manage system errors or downtime.
Conduct Periodic Reviews
Reconcile GST returns and e-invoice data regularly to identify and fix reporting gaps.
The inclusion of Section 234E marks a new era in invoice compliance for Indian businesses. With clear financial penalties now in place, companies must take e-invoice reporting seriously. As regulatory frameworks evolve, staying compliant is not just about avoiding penalties—it’s about building trust, transparency, and operational excellence.
If you're unsure how this applies to your business or need help automating your e-invoice process, consult a qualified tax advisor or CA firm today.