E-invoicing under the Goods and Services Tax (GST) system is now a mandatory requirement for businesses that exceed certain turnover thresholds in India. It seeks to simplify tax reporting, reduce invoice fraud, and improve transparency by linking invoicing directly to the GST portal through an Invoice Registration Portal (IRP). While e-invoicing helps with traceability and makes tax audits easier, small and medium enterprises (SMEs) face hurdles like adopting new technologies, integrating software, relying on internet access, and having limited knowledge of regulatory changes. This research paper looks at how e-invoicing improves compliance and analyzes the technological challenges preventing smooth adoption by businesses. A survey of 40 SMEs and accounting professionals was conducted to evaluate the system’s effectiveness and identify key challenges. Results indicate that 70% of respondents believe e-invoicing improves accuracy and cuts down on manual data entry, but 55% still encounter issues with software integration and system outages. The study concludes that while e-invoicing greatly enhances tax compliance and lowers errors in GST returns, ongoing technological support, user training, and simplified GST software are crucial for increasing adoption rates and reducing disruptions.