16 Bullet Points to be taken care of while implementing HSN digits from the new financial year 2021-22

A major change for which the businesses have to gear up starting 01st April 2021 is mentioning of HSN codes on all the tax invoices.

Major points to be considered for this new provision are as below:

1. The change is an extension of the amendment made in Notification 12/2017-Central Tax through Notification No. 78/2020 dated 15/12/2020.

2. For turnover up to 5 crores : HSN Digits
If supply made to registered person 4
If supply made to unregistered person NIL

3. For turnover more than 5 crores :

If supply made to registered person 6
If supply made to unregistered person 6

4. For exporters :

If supply made to registered person 8
If supply made to unregistered person 8

5. It’s optional to show HSN codes in B2C invoices for turnover below 5 crores as per point no 2 above.

6. The 49 chemicals as specified in the enclosed Annexure have to be mandatorily shown under 8 digits as per Notification no. 90/2020 dated 01st December 2020.

7. It is mandatory to report minimum digits as per points 3, 4 and 5 above in Table 12 of GSTR 1.

8. It is mandatory to report minimum digits as per points 3, 4 and 5 above in Tax Invoices also.

9. The digits of HSN codes will have to be reported based on the aggregate turnover of the preceding financial year.

10. Mention of these 8 digits HSN on the export invoices is a requirement under Foreign Trade Policy.

11. Mention of these 8 digits ITC (HS) on the export invoices is also a requirement under Foreign Trade Policy and not under Gst framework.

12. The tax rates need to be taken care of since different items with some differences in composition of the items carry different HSN digits.

13. All the tax invoices should contain HSN digits, description of goods and tax rates specifically for better transparency and avoid any future litigations.

14. The minor description change completely changes the tax rate and the HSN codes. The detailed description as per point 12 above will prove to be a bona fide disclosure in case of any litigations or confusions.

15. The Govt. is implementing Text Miningthrough ADVAIT in the GST Regulatory Framework, it will become really easy for the Department to track HSN mismatches and mistakes in Tax Invoices, GSTR 1, GSTR 9, E Way Bill, AOC 4, Cost Audit Report, Registration Certificate, Shipping Bill and Bill of Entry and issue notices for penalizing Businesses automatically.

16. There is also a fine of Rs. 50,000 for committing a mistake related to this particular scenario under section 125 of the GST.

Specified Chemical Attract HSN Digit 8 in Tax Invoice

S. No. Chemical name HSN Code
(1) (2) (3)
1 Mixture of (5-ethyl-2-methyl-2-oxido-1,3,2- dioxaphosphinan-5-yl) methyl methyl methylphosphonate (CAS RN 41203-81-0) and Bis [(5-Ethyl-2-methyl-2-oxido-1,3,2-dioxaphosphinan-5-yl)methyl] methylphosphonate (CAS RN42595-45-9) 38249100
2 Dimethyl propylphosphonate 29313200
3 (5-Ethyl-2-methyl-2-oxido-1,3,2-dioxaphosphinan-5-yl) methy lmethy l methy l phosphonate 29313600
4 Bis[(5-Ethyl-2-methyl-2-oxido-1,3,2-dioxaphosphinan-5-yl)methyl ] methy l phosphonate 29313700
5 2,4,6-Tripropyl-1,3,5,2,4,6-trioxatriphosphinane 2,4,6-trioxide 29313500
6 Dimethyl methylphosphonate 29313100
7 Diethyl ethylphosphonate 29313300
8 Methylphosphonic acid with ( aminoiminomethyl) urea ( 1: 1) 29313800
9 Sodium 3-(trihydroxysilyl) propyl methylphosphonate 29313400
10 2,2-Diphenyl-2-hydroxyacetic acid 29181700
11 2-(N,N-Diisopropylamino) hydrochloride 29211400
12 2-(N,N-Dimethylamino) ethylchloride hydrochloride 29211200
13 2-(N,N-Diethylamino) ethylchloride hydrochloride 29211300
14 2-(N,N-Diisopropylamino) ethanol 29221800
15 2-(N,N-Diethylamino) ethanethiol 29306000
16 Bis (2-hydroxyethyl) sulfide 29307000
17 2-(N,N-Dimethylamino) ethanethiol 29309092
18 Product from the reaction of Methylphosphonic acid and l,3,5-Triazine-2,4,6- triamine As applicable
19 3-Quinuclidinol 29333930
20 R-(- )-3-Quinuclidinol 29333930
21 3,9-Dimethyl-2,4,8,10-tetraoxa-3,9-diphosphaspiro [5.5] undecane 3,9- dioxide 29313900
22 Propylphosphonic dichloride 29313900
23 Methylphosphonic dichloride 29313900
24 Diphenyl methylphosphonate 29313900
25 O-(3-chloropropyl)O-[4-nitro-3-(trifluoromethyl)phenyl] methylphosphonothionate 29313900
26 Methylphosphonic acid 29313900
27 Product from the reaction of methylphosphonic acid and 1,2-ethanediamine As applicable
28 Phosphonic acid, methyl-, polyglycol ester (Exolit OP 560 TP) 38249900
29 Phosphonic acid, methyl-, polyglycol ester (Exolit OP 560) 38249900
30 Bis (polyoxyethylene) methylphosphonate 39072090
31 Poly(1,3-phenylene methyl phosphonate) 39119090
32 Dimethylmethylphosphonate, polymer with oxirane and phosphorus oxide 38249900
33. Carbonyl dichloride 28121100
34. Cyanogen chloride 28531000
35. Hydrogen cyanide 28111200
36. Trichloronitromethane 29049100
37. Phosphorus oxychloride 28121200
38. Phosphorus trichloride 28121300
39. Phosphorus pentachloride 28121400
40. Trimethyl phosphite 29202300
41. Triethyl phosphite 29202400
42. Dimethyl phosphite 29202100
43. Diethyl phosphite 29202200
44. Sulfur monochloride 28121500
45. Sulfur dichloride 28121600
46. Thionyl chloride 28121700
47. Ethyldiethanolamine 29221720
48. Methyldiethanolamine 29221710
49. Triethanolamine 29221500

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11 Comments

  1. HARISH BHATT says:

    Dear sir,

    We have facing some problem in 6 digit HSN code our turnover is around 100cr. in some 6 digit HSN e-invoice portal says invalid and in some e-way bill says invalid.
    please suggest can we make 8 digit hsn invoice we have also export some product.

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