The government has introduced mandatory reporting of Harmonized System of Nomenclature (HSN) codes in Table-12 of GSTR-1 to enhance tax compliance and transparency. As per Notification No. 78/2020 – Central Tax, dated October 15, 2020, businesses must report 4-digit or 6-digit HSN codes depending on their Aggregate Annual Turnover (AATO) from the previous financial year. This requirement is being introduced in phases to ensure a seamless transition for taxpayers.
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Implementation Timeline & Key Changes
Phase 1: April & August 2022
- Businesses with AATO up to ₹5 crore: Required to report 2-digit HSN codes. Manual entry allowed with warnings for incorrect entries.
- Businesses with AATO above ₹5 crore: Required to report 4-digit HSN codes. Manual entry allowed with alerts for errors.
- Part II Update: Businesses with AATO above ₹5 crore must report 6-digit HSN codes.
Phase 2: Effective November 1, 2022
- Businesses with AATO up to ₹5 crore: Now required to report 4-digit HSN codes. Manual entry is still permitted but flagged for incorrect entries.
- Businesses with AATO above ₹5 crore: Now required to report 6-digit HSN codes, with alerts for incorrect manual entries.
Phase 3: Effective February 2025
What’s New?
- Manual entry of HSN codes will no longer be permitted.
- Taxpayers must select HSN codes from a system-generated drop-down list.
- Auto-population of descriptions based on the selected HSN code.
Stronger Validation Checks in Table-12
- Cross-verification of B2B and B2C supplies with relevant sections of GSTR-1.
- Errors flagged with warnings, though return filing remains possible.
- If B2B transactions are declared elsewhere in GSTR-1, Table-12 must not be left blank.
Additional Features & Enhancements
- Separate tabs for B2B and B2C supplies in Table-12 for better clarity.
- New “Download HSN Codes List” button for quick access to updated HSN & SAC codes.
- Improved search functionality to auto-fill HSN details based on product descriptions.
Future Updates
Phase 4 implementation details will be announced soon, further refining compliance measures to minimize reporting errors.
Key Takeaways for Businesses
To ensure smooth GST filing, businesses should stay informed about these updates and align their reporting processes accordingly. Adapting to the new HSN validation rules will help in maintaining compliance and avoiding unnecessary errors.
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Disclaimer: This document is for informational purposes only and should not be considered legal or tax advice. Businesses should refer to official GST notifications or consult with tax professionals for specific compliance requirements.
Contact Information: For further assistance or inquiries regarding HSN code reporting and GSTR-1 compliance, please contact: Ritesh |
Phone: +91 85728 27718 | Email: ritesh.8572827718@gmail.com
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