GST : HSN Code Update

With effect from 1st April, 2021, the govt has made HSN/SAC reporting mandatory based on aggregate annual turnover in the preceding financial year.

What Does This Mean?
1. For annual turnover greater than 5 Cr: taxpayer must furnish a 6 digit code on all invoices

2. For annual turnover up to 5 Cr: taxpayer must furnish a 4 digit code on B2B invoices

Common mistakes while filing HSN Summary & how to avoid them

1. Blank cells for HSN code: HSN/SAC code is mandatory in every line of HSN summary, even for B2C transactions. Make sure you don’t leave any HSN field empty

2. Invalid HSN codes: HSN/SAC code must be an exact match with the CBIC data. Otherwise the HSN code will be deemed invalid

3. Multiple entries for the same combination of HSN, UQC and Rate: combination of HSN, UQC and Rate must be unique

Other useful tips
1. For services the UQC must be “NA” and the quantity must be Zero
2. For goods the UQC cannot be “NA”
3. The tax rate must only be one of these – 0%, 0.1%, 0.25%, 1%, 1.5%, 3%, 5%, 7.5%, 12%, 18%, 28%

(CA. Neeraj Garg)