GSTN Implements Phase-III Changes to Table-12 of GSTR-1 & 1A from April 2025

Summary: The GST Network (GSTN) has introduced Phase-III changes to Table-12 of GSTR-1 and GSTR-1A to enhance HSN-wise summary reporting and minimize errors in GST filings. Starting from the February 2025 return period (April 2025 onward), the key changes include mandatory dropdown selection for HSN codes, with no manual entry allowed. Taxpayers must now select HSN codes from a predefined list, with descriptions auto-populated for consistency. Additionally, Table-12 has been split into two distinct tabs: one for B2B (business-to-business) supplies and another for B2C (business-to-consumer) supplies, requiring separate HSN reporting for each. To further ensure accuracy, an auto-validation feature has been introduced (currently in warning mode), checking the consistency of HSN totals against other GSTR-1 tables. While mismatches will only trigger alerts, they will not block return filing. Other improvements include the ability to download the full HSN list and enhanced search features for faster reporting. These changes are mandatory for businesses with annual turnover over ₹5 crore, requiring 6-digit HSN codes. Business owners and tax consultants are advised to update their accounting software, train staff on new reporting requirements, and ensure alignment with the GSTN HSN dropdown list. As the system evolves, future phases (Phase-IV) will likely enforce mandatory validations, so early preparation is key to ensure smooth compliance.

Mandatory Dropdown HSN Selection, Tab-wise B2B/B2C Reporting & Value Validations

The GST Network (GSTN) has rolled out Phase-III reforms to Table-12 of GSTR-1 and GSTR-1A to streamline HSN-wise summary reporting and minimize errors and misclassification. These changes are applicable from February 2025 return period, impacting returns filed in April 2025 onward.

New in Phase III

1 HSN Code Selection Only via Dropdown – No Manual Entry

• Manual HSN entry is now completely disabled.
• Taxpayers must select the correct HSN from a predefined dropdown list only.
• A description field will auto-populate from the HSN master, ensuring consistency.

2 Table-12 Split into Two Tabs

• B2B Supplies Tab: For supplies made to registered persons.
• B2C Supplies Tab: For supplies made to unregistered persons. Taxpayers must now report HSN-wise summary separately under each tab.

3 Auto-Validation Introduced (In Warning Mode for Now)

• System will validate HSN-wise value totals against the values reported in other GSTR-1 tables:
  • B2B Validation with Tables 4A, 4B, 6B, 6C, 8, 9A/9B/9C (registered), 15, 15A.
  • B2C Validation with Tables 5A, 6A, 7A/7B, 8, 9A (export & B2CL), 9B/9C (unregistered), 10, 15, 15A.
• Mismatches will show warning alerts but will not block return filing at this stage.

4 Download HSN List Button Added

• Enables download of full HSN/SAC code list in Excel with official descriptions.

5 Enhanced “Product Name as in My Master” Search

• Enables keyword search and auto-fills HSN, description, UQC, and quantity from the user’s saved master list.

Applicability – HSN Code Requirements by Turnover

As per Notification No. 78/2020 – Central Tax dated 15.10.2020

What Actions Should Taxpayers Take Now?

For Business Owners:

• Ensure accounting software or billing system uses correct HSN and is integrated with updated GSTN HSN dropdowns.
• Prepare for the tab-wise bifurcation of supplies (B2B & B2C).
• Educate your accounting team about new requirements.
• Download the HSN Master using the “Download HSN Codes List” button and share internally.

For Tax Consultants:

• Review each client’s annual turnover (AATO) to check applicability.
• Pre-check all HSNs used in clients’ systems and align with GSTN dropdown list.
• Use My HSN Master efficiently for faster reporting.
• Communicate with clients regarding the split in B2B/B2C supply reporting.
• Train clients on validations and ensure correct reconciliation of Table-12 vs other GSTR-1 tables.
• Flag mismatches early even though validations are only in warning mode.

Practical Recommendations

• Always review Table 12 before filing GSTR-1 to ensure HSN and values match corresponding tables.
• Do not leave B2B Tab empty if you have reported B2B invoices elsewhere in GSTR-1.
• Expect future phases (Phase IV) to make validations mandatory, so maintain discipline from now.

Legal & Advisory Context

• Implemented as part of Notification No. 78/2020 – Central Tax dated 15.10.2020.
• Enforced through Rule 59(6) of the CGST Rules.
• Supports compliance under Section 37 of the CGST Act (Furnishing of GSTR-1).
• Earlier advisories and updates can be found on the GST Portal under “Advisories and Updates”.

Timeline

Final Word

The GSTN’s move to mandate dropdown HSN selection and structured bifurcation of Table-12 is part of its effort to improve compliance accuracy and reduce mismatches in returns. While the current changes are non-blocking, taxpayers and consultants must act now to adapt systems, train teams, and align their reporting formats with the new structure.

Proactive compliance will not only ensure seamless return filing but also prepare you for stricter validations in the upcoming Phase-IV.

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