HSN requirement on invoices:
A major compliance obligation that comes up from 01st April 2021
is mentioning of HSN codes on all the tax invoices.
The following 10 points are the important* to be noted.
1. For Aggregate Turnover upto Rs.5 Crore 4 digits to be mentioned if supplied to Registered person and NIL digits if supplied to unregistered person;
2. For Aggregate Turnover above Rs.5 Crore 6 digits to be mentioned for all supplies;
3. For exports 8 digits to be mentioned in export invoices and is also a requirement as per Foreign Trade Policy;
4. It’s optional to show HSN codes in B2C invoices for turnover below 5 crores;
5. 49 chemicals as per Notification no. 90/2020 dated 01/12/2020 have to be mandatorily shown under 8 digits code;
6. It is mandatory to report minimum digits as above in Table 12 of *GSTR 1 and Tax Invoice also.
7. The Govt. plans implementing text mining a new data analytic tool through ADVAIT in the GST Regulatory Framework.
8. This will be an extremely useful tool for the Department to track mismatches and mistakes in Tax Invoices, GSTR 1, GSTR 9, E Way Bill, Shipping Bill and Bill of Entry especially based on HSN.
9. There is also a fine of Rs. 50,000/- (Rs. 25,000/- under each of CGST + SGST Acts) for committing a mistake related to this particular scenario under section 125 of the GST Acts.
10. All the tax invoices therefore should contain HSN digits, description of goods and tax rates specifically for better transparency and avoid any future litigations.
The following (03) Three notifications are relevant in this regard.
a) Notification 12/2017-Central Tax, dt:28/06/2017
b) Notification No. 78/2020 dated 15/12/2020.
c) Notification no. 90/2020 dated 15/12/2020