Notification No. 88/2020 dated 15.10.2020 (Central Tax)
In the said notification w.e.f 01.04.2021
Those Tax Payer whose Aggregate Turnover above Rs.5 Crore during the Financial year (2020-2021), 6 Digit HSN/SAC for Goods & Services to be mentioned in all Type of Tax Invoices.
AND
Those Tax Payer whose Aggregate Turnover upto Rs.5 Crore during the Financial year (2020-2021) 4 Digit HSN/SAC for Goods & Services to be mentioned in all Type of ‘Tax Invoices’ 4 Digit HSN for Goods and Services to be mentioned as optional basis in ‘B2C Invoices’
Further Notification No. 90/2020 – Central Tax dated 01.12.2020 for certain class of supply 8 Digits HSN required to be mentioned covered Section VI (Chapters covered 28 to 38) Chemical and para-chemical products
A Clarification issued by GSTN dated 12.04.2021 that the Taxpayer to use HSN as per Customs Tariff Act, 1975. Specific 6-digit & 8 Digit HSNs, as available in the Customs Tariff to allow in the system.
However, incidentally taxpayers used first 6-digits out of valid 8-digit HSN, those 6 digit HSN are not allowed.
Taxpayers must use 6 Digit & 8 Digit complete HSN as available in Customs tariff.
Now the question is what is HSN stands for? The full form of HSN is ‘Harmonized System Nomenclature.’
HARMONIZED: Means two or more things going together and producing an attractive result
NOMENCLATURE: Means a system of naming things
‘Harmonized System of Nomenclature ‘To classify goods in common name for trade World wide’.
History of HSN: The Harmonized System was introduced in the year 1988 and has been adopted by most of the countries. The World Customs Organization (WCO) developed HSN as a multipurpose international product description, to facilitate the classification in a systematic way to the world. India also the member of ‘WCO’ since 1971.
In pre GST era HSN required under Central Excise Act to raise Central Excise Invoice, at the time of removal of Goods and Customs act for Export and Import of goods.
HSN Covered approximately 5,000 article/product descriptions has headings and subheadings, in 99 chapters, classified in 21 sections.
Why 6 Digit HSN introduced in India at the GST era
The 6 Digit HSN common for all the countries those are the member of (WCO). After 6 digit the member country has liberty to add more digits for their further clarity, in India we used 8 Digit, and in USA they used 10 Digit.
Detail classification of 8 digit
For example: Out of 21 HSN Sections, Section XI (Chapters covered 50 to 63): i.e Textiles and textile articles (In broader Classification)
The Eight digits we can broke into four parts under chapter 62
Chapter 62 = Articles of apparel and clothing accessories, not knitted or crocheted
If we take next two digits of that chapter, 62 03 = Articles of apparel and clothing accessories, not knitted or crocheted (62) – Men’s or boys’ suits, ensembles, jackets, blazers, trousers bib and brace overalls, breeches and shorts (other than swimwear) (03)
The next two digits are, i.e 62 03 39 = Articles of apparel and clothing accessories, not knitted or crocheted (62) – Men’s or boys’ suits, ensembles, jackets, blazers, trousers bib and brace overalls, breeches and shorts (other than swimwear) (03) – of Other Textile Material (39)
The next two digits are i.e. 62 03 39 11 = Articles of apparel and clothing accessories, not knitted or crocheted (62) – Men’s or boys’ suits, ensembles, jackets, blazers, trousers bib and brace overalls, breeches and shorts (other than swimwear) (03) – of Other Textile Material (39) – Khadi (11)
Conclusion
India’s move to GST regime and HSN based classification with Tax Rates an initiative of ‘ease of doing business in India’, vis-a-vis ‘The right to do business under Article 19 (1) (g) of part III of the Constitution of India is a fundamental right given to the citizens of India.
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Pl.prepare in details a INCOME TAX APPEAL DRAFTING in this faceless situation….kindly…