E-Invoicing from 1 January 2027: Reverse Charge Purchases and Import of Services Now Covered
E-invoicing is set to enter a new territory from 1 January 2027. Businesses already covered by the e-invoicing system will now have to generate an Invoice Reference Number (IRN) for certain inward transactions covered by the Reverse Charge Mechanism (RCM), including import of services.
The Central Board of Indirect Taxes and Customs (CBIC), through Notification No. 04/2026–Central Tax dated 26 October 2026, has expanded the scope of Notification No. 13/2020–Central Tax issued under Rule 48(4) of the CGST Rules.
The amendment will come into force from 1 January 2027.
This is an important compliance development because e-invoicing has traditionally been associated primarily with outward supplies. The new framework brings certain recipient-generated documents for inward supplies under RCM within the e-invoicing ecosystem.
What Has Changed?
Notification No. 04/2026–Central Tax substitutes the existing description of transactions covered by e-invoicing.
From 1 January 2027, e-invoicing will cover:
1. Supply of goods or services or both to a registered person — B2B supplies
2. Supply of goods or services or both for exports
3. Supply received from an unregistered person where tax is payable by the recipient under Reverse Charge
4. Import of services
The first two categories were already within the existing framework.
The significant change is the addition of the third and fourth categories.
In simple words:
RCM self-invoices and import-of-service transactions are moving into the e-invoicing framework.
Who Will Be Affected?
The amendment is particularly relevant to businesses that are already required to generate e-invoices and which also undertake transactions covered by Reverse Charge.
For example, a business may already be generating IRNs for its B2B sales.
If that business also:
– purchases specified goods or services from an unregistered supplier on which it is liable to pay GST under RCM; or
– receives taxable services from a foreign service provider,
the corresponding RCM/import-of-service documentation will now fall within the notified e-invoicing framework from 1 January 2027.
The important point is that the amendment changes the transactions covered by e-invoicing; it does not, by itself, change the turnover threshold that determines whether a taxpayer is otherwise required to comply with e-invoicing.
What Happens in an RCM Transaction?
Under Reverse Charge, the liability to pay GST shifts to the recipient in specified circumstances.
In a transaction involving an unregistered supplier, the recipient may therefore be required to issue a self-invoice and discharge the applicable GST under RCM, wherever the law so requires.
From 1 January 2027, such notified RCM transactions will also need to be brought within the e-invoicing mechanism by taxpayers covered by the e-invoicing requirement.
The amended system has also introduced specific supply-type codes in the e-invoice schema:
RCMDOM — Domestic supply from an unregistered person under RCM
RCMIMP — Import of services
This distinction will become important for accounting and ERP systems.
Import of Services: A Major Change
The second major addition is import of services.
Businesses regularly obtain services from overseas service providers, including:
– professional and consultancy services;
– software and technology services;
– cloud and digital services;
– subscription-based services;
– technical services; and
– other cross-border business services.
Where an import of service attracts GST under Reverse Charge, the transaction will now fall within the expanded e-invoicing framework for taxpayers to whom e-invoicing applies.
This means that businesses should not look only at their outward sales invoices when preparing for the new compliance regime.
Their accounts-payable function will also need to be examined.
The Important Change: E-Invoicing Is No Longer Only About Sales
For years, many businesses have had a simple internal understanding:
Sales invoice → Generate IRN → Report in GST system.
That approach will need to be revisited.
From January 2027, the compliance process will also have to consider:
Purchase from unregistered person under RCM → Self-invoice → IRN
and
Import of services → Relevant document/self-invoice → IRN
where the transaction and taxpayer fall within the notified requirements.
This is why the amendment is particularly important for accounts-payable teams, tax teams, ERP administrators and GST professionals.
What Should Businesses Do Before 1 January 2027?
The change may appear simple, but implementation can require substantial internal preparation.
1. Identify all RCM vendors
Prepare a list of vendors from whom the business receives supplies under Reverse Charge.
Particular attention should be given to unregistered suppliers where the recipient is liable to pay tax under RCM.
2. Review import-of-service transactions
Prepare a separate list of all overseas service providers.
Do not restrict the review to vendors described as “foreign consultants”.
Look at software subscriptions, cloud services, professional fees, technical services and other recurring payments.
3. Review the accounting system
The ERP or accounting software should be capable of identifying these transactions separately.
The new e-invoice schema specifically recognises:
– RCMDOM
– RCMIMP
Therefore, appropriate configuration may be necessary.
4. Coordinate with the GST team
The accounts-payable team may process the invoice, while the GST team determines whether RCM applies.
The two functions should therefore work together.
5. Review the self-invoice process
Businesses should establish a clear internal process for determining:
– when a self-invoice is required;
– when RCM applies;
– when the e-invoice/IRN requirement is triggered;
– who will generate the IRN; and
– how the transaction will be reconciled with GST returns.
6. Update SOPs
The existing SOP for e-invoicing may deal exclusively with outward supplies.
It should be revised to cover the newly notified RCM and import-of-service transactions.
What About the IRN?
The central purpose of e-invoicing is the generation of an Invoice Reference Number (IRN) through the prescribed electronic invoicing system.
The amended e-invoice schema provides specific codes for the newly covered transactions.
This is significant because it means businesses will need to ensure that their systems can correctly identify and transmit these transaction types.
A wrong classification at the ERP level could therefore create downstream GST reconciliation and compliance issues.
A Simple Example
Suppose a company already falls within the e-invoicing regime.
During January 2027, it purchases a taxable service from an unregistered Indian supplier and GST is payable by the company under RCM.
The company should not treat this simply as an ordinary purchase transaction.
The RCM implications need to be identified, the applicable self-invoice/documentation requirements examined, and the transaction processed under the applicable e-invoicing requirements.
Similarly, suppose the company receives consultancy services from a foreign service provider.
If the transaction constitutes an import of services on which GST is payable under RCM, it will fall within the newly notified category of import of services for e-invoicing purposes.
Does This Change the GST Liability?
An important distinction must be maintained.
The notification expands the e-invoicing requirement. It does not itself create a new Reverse Charge liability.
Whether GST is payable under RCM continues to depend upon the applicable provisions of the CGST Act, IGST Act and relevant notifications.
The amendment essentially determines that certain transactions, where the taxpayer is otherwise within the e-invoicing regime, must also be brought into the electronic invoicing framework.
Why This Amendment Is Important
The change reflects a broader movement towards transaction-level digital reporting of GST supplies.
The Government is increasingly seeking greater visibility over transactions not only through outward invoices but also through transactions where the recipient becomes responsible for tax under Reverse Charge.
This can improve:
– transaction matching;
– tax administration;
– audit trails;
– compliance monitoring; and
– detection of mismatches.
For businesses, however, it also means that the traditional separation between the sales process and GST compliance is becoming less practical.
Key Takeaways
E-invoicing from 1 January 2027 can be remembered through four categories:
B2B + Exports + Domestic RCM + Import of Services
The first two were already covered.
The significant additions are:
RCM supplies received from unregistered persons
and
Import of services
The amended notification specifically provides that the expanded scope will apply from 1 January 2027.
Businesses already covered by e-invoicing should therefore start reviewing their purchase and accounts-payable processes, rather than waiting until January.
Final Word
E-invoicing started as a reform primarily associated with sales invoices.
It is now moving deeper into the purchase side of business.
From 1 January 2027, an eligible taxpayer may have to think about an IRN not only when it raises an invoice to its customer, but also when it receives certain supplies under Reverse Charge or imports services.
For businesses, the message is simple:
Do not wait for 1 January 2027 to discover that your purchase module was never designed for e-invoicing.
Start with the vendor master, identify RCM transactions, map overseas service providers, review the self-invoice process and speak to the ERP/GSP team well in advance.
The new compliance year may bring a new question to the accounts department:
“You generated the purchase entry—but where is the IRN?”
Legal Reference: Notification No. 04/2026–Central Tax dated 26 October 2026, issued under Rule 48(4) of the CGST Rules, amending Notification No. 13/2020–Central Tax. The amendment comes into force on 1 January 2027.
The copy of the Notification is as under:
