HSN Code (6 digits / 8 digits) Mandatory from 1st April 2021

Mentioning HSN Code (6 digits / 8 digits) becomes mandatory from 1st April 2021 on the basis of turnover of the taxpayer.

The 1st proviso to rule 46 of CGST Rules 2017 has been amended; vide notification no. 79/2020 - CT dated 15/10/2020 with regards to declaration of HSN code in invoices.

 

In the said amendment of proviso notification no. 78/2020 - Central tax, dated 15/10/2020 is issued in which mentioning of HSN code becomes mandatory on certain terms. The said amendments become applicable from 1st April, 2021.

Let’s have a look at the key points of this amendment.

How to mention HSN Code for aggregate turnover upto Rs.5 crore?

Those taxpayers whose aggregate turnover in the preceding financial year is upto Rs. 5 crore and they are issuing: 

• Invoice to Registered person (i.e. B2B invoices) than HSN code mandatory upto 4 digits. 
• Invoice to unregistered person (i.e. B2B invoices) than mentioning HSN code upto 4 digits is optional.

 

How to mention HSN Code for aggregate turnover more than Rs.5 crore?

Those taxpayers whose aggregate turnover in the proceeding financial is more than Rs. 5 Crore then it is mandatory to mention HSN Code of 6 digits in all tax invoices (whether it is B2B or B2C).

Also Read: GST- QRMP Scheme (Quarterly Return Monthly Payment Scheme)

 

How to mention HSN Code for Chemical based products?

As per notification no 90/2020 dated 1st Dec 2020, there are 49 chemicals based products in which it is mandatory to mention 8 digits of HSN code.

 

Is HSN Code mandatory in GSTR-1?

The digits of HSN code 4 digits or 6 digits as the case may be also required to be shown in Table 12 of Form GSTR-1.

So this HSN Code needs to be shown in GSTR-1 as well as in Tax invoice with effect from 1st Apr, 2021.

HSN Code Chart

Also Read: Section 51 of CGST | TDS under GST | with Example

What is the penalty of filing incorrect HSN code?

If you mention incorrect or not mentioned HSN code on the tax invoice and for GSTR-1 then there is a penalty of Rs. 50000 (Rs. 25000 for CGST and Rs. 25000 for SGST)

 

Summary

Now HSN Code (6 digits / 8 digits) in Invoice and GSTR-1 Mandatory from 1st April 2021. So you need to identify your supplies whether it is B2B or B2C and check your annual aggregate turnover of preceding financial year (like for 2021-2022 preceding financial year is 2020-21) and accordingly mention the HSN codes in your tax invoice and in GSTR-1.

Also Read: Section 52 of CGST | TCS under GST | with Example

E-Invoicing under GST (Applicability from 1st April, 2021)