Sage-Tips

Is HSN code mandatory?

The mandatory reporting of HSN codes was introduced while preparing the GSTR-1 return from 1st April 2021. As per the revised declaration, taxpayers with an annual aggregate turnover of more than Rs. 5 crore must mandatorily declare six digits of the HSN code on all the tax invoices.

Why is HSN code important?

The purpose of HSN codes is to make GST systematic and globally accepted. HSN codes will remove the need to upload the detailed description of the goods. This will save time and make filing easier since GST returns are automated.

What is the penalty for not filing HSN code in GST?

As per section 125:- If a taxpayer does not enter his HSN code in the GSTR-1 column then a penalty will be imposed on 25000 of CGST and 25000 = 50000 of SGST.

Is 8 digit HSN code mandatory?

HSN codes of 8 digits are mandatory only in case of export and imports of goods. A registered person having aggregate turnover up to Rs 5 Cr in the previous FY may not mention the number of digits of HSN Code in a tax invoice issued by him under the said rules in respect of supplies made to unregistered persons.

Is HSN code mandatory for GST refund?

Details can be obtained from the respective inward invoices. If HSN/SAC code is not compulsory to be mentioned for their suppliers in their inward invoices, then this requirement of mentioning HSN codes in Annexure B will not be necessary for the applicants.

Is it mandatory to mention HSN code in GST invoice?

It will be mandatory to specify the number of digits of HSN code for goods or services that a class of registered persons shall be required to mention as may be specified in the notification issued from time to time under proviso to rule 46 of the said rules.

Can HSN be amended?

You can amend with the same invoice but with difference amount. You should calculate the HSN wise total by considering 7 invoices. 2. Its not mandatory to change the invoice number.

Is HSN code mandatory for turnover less than 1.5 crore?

Less than Rs. 1.5 crores – HSN/SAC code is not mandatory (Hence, composition dealers may not be required to specify HSN at 2-digit level also). Rs. 1.5 crores to Rs.

Is HSN mandatory for export invoice?

Turnover above Rs. 5 crore must use 6-digit HSN code for all invoices. Turnover less than or equal to Rs. 5 crore must use 4-digit HSN code for all the B2B invoices.

What is the HSN/HS code?

The reason behind using HSN/HS code is that one product has different name all around the world. To avoid miss communication the HSN/HS code is introduced by WCO (world custom organisation). Can I export goods in different HSN codes if I buy them in another HSN code?

Can I claim input tax credit if HSN code is incorrect?

One of the requirement of claiming input tax credit is that invoice should be complete in all respects as mentioned in Section 31 and this section requires to mention HSN for goods and services on the invoice. So if you are furnishing incorrect HSN Code, buyer will not be able to claim input tax credit.

What happens if HSN code is incorrect in GST?

So if you are furnishing incorrect HSN Code, buyer will not be able to claim input tax credit. Also, HSN are unique codes and these can be linked to GST rates. So at the time of filing return you may just have to select HSN Code and system will automatically fetch applicable GST rate.

What is the difference between HSN and SAC?

HSN means Harmonized System Nomenclature, is widely used in many countries to classify goods for taxation purpose, claiming benefits etc. SAC means Services Accounting Code, is to classify goods for taxation purpose, claiming benefits etc.