HSN/SAC Code Reporting Guidelines for GST Returns

HSN/SAC code reporting in GST returns is guided by turnover thresholds and nature of sales. Aggregate turnover includes taxable, exempt, nil-rated, and export supplies, excluding inward supplies under RCM. For businesses with turnover up to Rs. 5 crore, 4-digit HSN codes are mandatory for B2B taxable, exempt, and nil-rated sales, while optional for B2C sales. For turnovers exceeding Rs. 5 crore, 6-digit HSN codes are mandatory for all categories. Turnover of the preceding year, computed PAN-wise rather than GSTIN-wise, determines HSN requirements across branches, irrespective of individual branch turnovers. For example, if a company with multiple branches has a combined turnover exceeding Rs. 5 crore, 6-digit HSN codes are applicable across all branches. Export sales mandate the use of 8-digit HSN codes, with export of goods defined as transferring goods outside India, and export of services requiring specific conditions such as the supplier being in India and the recipient abroad, with payments received in convertible foreign exchange. These provisions aim to standardize reporting and enhance GST compliance.

1. Definition of Aggregate turnover:- It refers to the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on Reverse Charge Mechanism (RCM) basis), exempt supplies, exports of goods or services or both and inter-state supplies of persons having the same Permanent Account Number (PAN) computed on an all-India basis. 

2. If aggregate turnover is upto 5 crore or exceeds 5 crore:-

B2B sales:

B2C sales:

3. Turnover of current or preceding year:- Turnover of preceding year will be considered for determining the applicability of HSN code irrespective of the amount of aggregate turnover in current financial year. 

4. Turnover PAN wise or GSTIN wise:- We will check the turnover PAN wise instead of GSTIN wise turnover. If turnover within/exceeds the prescribed limit then HSN code of 4/6 digits will be applicable on all the branches of company irrespective GSTIN wise turnover is not exceeding 5 crore or exceeding 5 crores.

For Example:-  A company has total 5 GST number. Turnover of each branch is 2 crore in the preceding financial year. Here 6 digit of HSN code is mandatory instead of 4 digit of HSN code because aggregate turnover exceeds 5 crore.

Note:- Turnover of each branch will not be considered here.

5. Export sales:- HSN code of 8 digits is mandatory for export sales. 

a. Export of services means the supply of any service when, —

• • the supplier of service is located in India;
  • the recipient of service is located outside India;
  • the place of supply of service is outside India;
  • the payment for such service has been received by the supplier of service in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India; and
  • the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8.

b. Export of goods:- Export of Goods means taking goods out of India to a place outside India.

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