2-Factor Authentication in e-Invoice System/e-Way Bill

In today’s digital world, where cyber threats are constantly evolving, protecting sensitive data, especially financial and business-related information, is more important than ever. To enhance security and prevent unauthorised access, the government has rolled out an important update to the e-Waybill and e-Invoice systems: Two-Factor Authentication (2FA).

This added layer of protection helps ensure that only authorised users can access these systems by requiring not just a password, but also a second form of verification, like a one-time password (OTP). In this article, we’ll break down what 2FA is, why it’s important, and how it’s being implemented in the e-Waybill and e-Invoicing systems to keep your data safer and your compliance process more secure.

What is Two-factor authentication (2FA)?

Two-factor authentication (2FA), also known as dual-factor authentication or two-step verification, is a security method that requires users to verify their identity using two distinct authentication factors.

It is designed to safeguard both user credentials and the systems or resources they can access. Once registered for two-factor authentication, users can utilise the same credentials for accessing both the e-Invoice system and the e-Way Bill system.

NIC's Mandate on Two-Factor Authentication

The National Informatics Centre (NIC) has introduced two-factor authentication (2FA) on its platforms, including the e-invoicing portals NIC1 and NIC2, as well as the e-Way Bill portal, for selected categories of taxpayers. The implementation timeline and applicability of 2FA are as follows:

Also read:   GST Rule Changes for FY 2025–26

Purpose of Two-Factor Authentication

The Goods and Services Tax (GST) department has implemented two-factor authentication with the following objectives:

• To enhance the efficiency of accessing the e-Invoice and e-Way Bill systems
• To strengthen the overall robustness and reliability of the e-Invoice system
• To provide a secure environment for users interacting with the e-Invoice and e-Way Bill platforms

Why is Two-Factor Authentication Crucial for e-Invoicing and e-Way Bill Systems?

• Enhance Login Security: 2FA adds an additional verification step (like an OTP) beyond just a username and password, making it much harder for unauthorised users to gain access.
• Protect Sensitive Taxpayer Data:  e-Invoice and e-Way Bill systems contain critical financial and business data. 2FA helps prevent data breaches and fraud by verifying the user’s identity.
• Prevent Unauthorized Access:  Even if a password is compromised, 2FA ensures that access is denied without the second factor. Usually an OTP sent to a registered mobile number or generated via an app.
• Comply with Regulatory Standards: The GSTN (Goods and Services Tax Network) and NIC (National Informatics Centre) are introducing 2FA as a mandatory security protocol, especially for businesses with high turnover.
• Build System Robustness & Reliability:  As portal usage grows, security infrastructure must scale too. 2FA is a scalable way to make the entire GST ecosystem more robust against cyber threats.

Reduce Risk of Fraudulent Activities:  By enforcing an extra layer of identity confirmation, it becomes more difficult for malicious actors to create fake e-invoices or misuse e-Way Bills.  

Modes of Generating OTP for Login to GST e-Invoice & e-Waybill System

To make the login process more secure and user-friendly, the GST e-Invoice and e-Waybill System offers three convenient ways to generate a One-Time Password (OTP). Users can choose the method that works best for them:

• SMS: The OTP is sent via SMS to the assessee’s registered mobile number.
• Sandes App: Sandes is a government-backed messaging application. Assessees can download and install the app using their registered mobile number to receive the OTP directly within the app.
• NIC-GST Shield App: This is a mobile application provided by the e-Invoice/e-Way Bill system specifically for OTP generation. It can only be downloaded through the official e-Invoice or e-Way Bill portal. To use this app:
• Assessees must download, install, and register the app using their registered mobile number.
• Ensure the time displayed in the NIC-GST Shield app is synchronized with the e-Invoice/e-Way Bill system.
• Upon opening the app, an OTP will be displayed.
• This OTP can be entered on the portal to complete the authentication process.
• The OTP refreshes every 30 seconds, and no internet connection is required for generating it.

How to Register for Two-Factor Authentication

To register for 2-Factor Authentication on the e-Way Bill System, follow these simple steps:

• Log in to the e-Way Bill System.
• Go to the Main Menu and select "2-Factor Authentication".
• Confirm your registration.

Once registered, you’ll be required to enter a One-Time Password (OTP) along with your username and password every time you log in. This OTP is specific to each user account. If your GSTIN has multiple sub-users, each sub-user will have to authenticate separately using the mobile number registered in the e-Way Bill or e-Invoice System.

After setting up 2FA, the same authentication will be valid for both the e-Way Bill and e-Invoice portals, ensuring secure access across both systems.

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Frequently Asked Questions

1. What is 2-Factor Authentication (2FA) in the e-Invoice/e-Way Bill System?

2FA is a security feature requiring two layers of verification to access the e-Invoice or e-Way Bill portal—typically a username/password and a One-Time Password (OTP) sent to a registered mobile number or app.

2. What is an example of 2-Factor Authentication (2FA)?

A typical example of 2FA is logging into the GST portal using your username and password (first factor), followed by entering a one-time password (OTP) sent to your registered mobile number (second factor). Both steps are required to access the portal securely.

3. Is 2FA mandatory for e-invoicing and e-way bill systems?

Yes, the National Informatics Centre (NIC) has made 2FA mandatory in a phased manner. From 1st January 2025, businesses with an Annual Aggregate Turnover (AATO) of over ₹20 crore must use 2FA. It becomes mandatory for all taxpayers from 1st April 2025, regardless of turnover.

4. Is 2-Factor Authentication required for GST portal login?

No, 2FA is not required for logging into the GST portal. It is currently mandatory only for accessing the e-Invoice and e-Way Bill portals provided by NIC.

5. How can I disable 2FA in the e-Way Bill portal?

You can deregister from 2FA using the '2-Factor Authentication Registration / Deregistration' option if it's still optional for your business. However, once 2FA becomes mandatory (based on your AATO or after 1st April 2025), you will no longer be able to disable it.

6. How secure is 2-Factor Authentication?

2FA significantly increases security by requiring two forms of verification. Even if your password is compromised, unauthorised access is blocked without the second factor (usually an OTP). For added security, some third-party platforms like Clear offer compliance-certified alternatives that also ensure robust protection.

7. What is Multi-Factor Authentication (MFA)?

Multi-Factor Authentication (MFA) is an extended form of 2FA, requiring two or more verification steps to access a system, such as a combination of password, OTP, and biometric verification, to enhance security.

8. What are the available modes for receiving the OTP under 2FA?

NIC offers three modes to receive OTP for 2FA:

• SMS to the registered mobile number.
• Sandes App, a government messaging app.
• NIC-GST-Shield App, which generates OTPs offline, synced with the system clock.

9. Is 2FA mandatory for all taxpayers?

Yes, 2FA is being rolled out in phases and will be mandatory for all taxpayers from 1st April 2025, regardless of turnover. Earlier phases apply to businesses based on their Annual Aggregate Turnover (AATO).

10. What’s the difference between 2FA and Multi-Factor Authentication (MFA)?

2FA involves two authentication steps (e.g., password + OTP), while MFA may involve more, such as biometric verification, security tokens, or app-based approvals.

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