Requirement of HSN Code, HSN Code under GST, HSN Code for Tax Invoice, HSN Code for Goods and Service, Ebizfiling

CBIC makes it mandatory to declare HSN Code w.e.f. 01.04.2021

CBIC- Central Board of Indirect Tax and Customs amended its earlier notification regarding the requirement of HSN Code wherein all the businesses who had turnover of  more than one crore fifty lakhs rupees in a year were required to declare the HSN Code. According to the new notification issued by the CBIC dated 15.10.2020, irrespective of the turnover, it is mandatory for all the business owners to declare the HSN code under GST. In this article we will discuss the amendments made with regards to the requirement of the HSN Code for Tax Invoice under GST (Goods and Service).

 

What is HSN Code?

HSN is “Harmonized System of Nomenclature”, a 6 digit uniform code that was developed by the World Customs Organization (WCO) which was introduced to classify 5000+ products. The HSN Code came into effect from the year 1988 and is accepted worldwide. The HSN has been introduced so that systematic classification of goods around the world can be possible.

Amendment in the Provisions of HSN under GST

  • Via Notification No. 78/2020- Central Tax dated 15.10.2020, the CBIC announced that w.e.f 01.04.2021, It would be mandatory to declare the HSN Code on the TAX Invoices of Goods and Services.
  • This declaration of HSN Code shall be made irrespective of the Turnover.
  • However, the digits of the HSN Code would depend upon the turnover of the preceding Financial Year as follows:

 

No.

Aggregate Turnover in the preceding Financial Year

Number of Digits of Harmonized System of Nomenclature Code (HSN Code)

1.

Up to rupees five crores

4 Digits

2.

more than rupees five crores

6 Digits

 

  • The 4 digit HSN Code for Goods and Services is mandatory to be mentioned in B2B Tax Invoices for the taxpayers whose aggregate turnover is up to INR 5 crores in the previous Financial Year.
  • However, in case of B2C Tax invoices i.e. when supplies are made to unregistered persons, the 4 digit HSN code for Goods and Services can be mentioned on an optional bases wherein the aggregated turnover is up to 5 crores in the previous Financial Year.
  • Also, for the taxpayers who have aggregate turnover of more than Rs. 5 Crores in the previous Financial Year, the 6 digits HSN Code on the supplies of Goods and Services is mandatory B2B as well as B2C tax invoices.

Download: PDF of the Notification No. 78/2020- Central Tax dated 15.10.2020

Penalty for not mentioning HSN Code

In case of non-mentioning or mentioning wrong HSN code under the Goods and Service Tax Act, the penalty of INR 50,000/- ( INR 25000/- for CGST and SGST each) shall be levied.

 

It is Important to mention the HSN Code for the purpose of classifying goods from all over the World in a logical and systematic manner. This does not only set a system but also bring a uniform classification of the Goods and Services and facilitates International Trade.

 

Suggested Read: E-Way Bill under Under GST

 

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10 thoughts on “GST: Requirement of HSN Code is mandatory w.e.f. 01.04.2021

  1. Some people say tha the HSN code is not mandatory in case the turnover is lessthan 1.5 crore. IS it true? if Yes under what provisions of the GST ACt?

    1. This was the case earlier. But w.e.f. 1st April 2021, the declaration of the HSN Code has been made mandatory irrespective of the Turnover. However, if a registered person supplies to an unregistered person, the 4-digit HSN code is made optional, wherein the aggregated turnover is up to 5 crores in the previous Financial Year in B2B Tax invoices. In all other cases, it is mandatory. Read Notification- https://ebizfiling.com/wp-content/uploads/2021/03/notification-78-central-tax-english-2020.pdf, In case you have any further queries, please get in touch with our experts call on +919643203209

  2. Hell maam
    I have wrongly submitted hsn as 55092100 instead of 5509
    Am i in problem as both have the same gst rate

    1. You can change the wrongly submitted HSN Code by going to Non-Core Field. However, if you have any more queries you may get in touch with our experts call on +919643203209

  3. IF ANNUAL THE TURNOVER IS LESS THAN 10 LACS HOW MUCH MAXIMUM PENALTY IS TO BE PAID FOR SUCH TAX PAYER FOR NOT MENTIONING HSN CODE

    1. Hello KRUTHARTH,

      You don’t need an HSN Code if your company’s annual turnover is less than INR 1.5 crore. You won’t face any consequences for not mentioning the HSN Code. In any case, if your turnover for the previous financial year exceeded the maximum turnover limit, than to avoid a penalty of INR 50,000 (INR 25000 for CGST and SGST each), you must mentioned the HSN Code.

      For any Further assistance you can get in touch with Ebizfiling on +919643203209 / info@ebizfiling.com

  4. IS HSN COMPULSARY IN CASH OF REFUND APPLICATION FOR FY 19-20 AND IF YES SO EARLIER THE SUPPLER NOT METION HSN IN GSTR-2A SO HOW CAN HOW WE ENTERD IN REFUND APPLICATION EXCEL IN 19-20.

    1. Hello Prafull,

      According to the GST refund provisions, you can claim a refund in GSTR 2A within two years. In your case two years have been passed, you can not apply for a refund for financial year 19-20. For further assistance, please contact us at +919643203209 or info@ebizfiling.com

  5. IS HSN CODE AVAILABLE FOR PRODUCTS THAT COME UNDER NON-GST IF APPLICABLE CAN U TELL HSN CODE FOR PETROL AND DIESEL SOLD IN PETROL BUNK?

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