The government has mandated the reporting of Harmonized System of Nomenclature (HSN) codes in Table-12 of GSTR-1 to improve tax compliance and enhance transparency. As per Notification No. 78/2020 – Central Tax, dated October 15, 2020, businesses must report either 4-digit or 6-digit HSN codes depending on their Aggregate Annual Turnover (AATO) from the previous financial year. This phased implementation is designed to facilitate a seamless transition for taxpayers.
For businesses with AATO up to ₹5 crore: Reporting of 2-digit HSN codes was required. Manual entry was permitted with warnings for incorrect inputs.
For businesses with AATO above ₹5 crore: Initially required to report 4-digit HSN codes, with manual entry permitted alongside alerts for errors.
Subsequent Update: Businesses with AATO exceeding ₹5 crore had to shift to reporting 6-digit HSN codes.
For businesses with AATO up to ₹5 crore: Mandatory reporting of 4-digit HSN codes, with manual entry allowed but flagged for errors.
For businesses with AATO above ₹5 crore: Now required to report 6-digit HSN codes, with error alerts for incorrect manual entries.
Manual entry of HSN codes will no longer be allowed.
Taxpayers must select HSN codes from a system-generated drop-down list.
Product descriptions will be auto-populated based on the selected HSN code.
System cross-verification of B2B and B2C transactions with other sections of GSTR-1.
Errors will be flagged with warnings, but taxpayers will still be able to file returns.
If B2B transactions are reported elsewhere in GSTR-1, Table-12 cannot be left blank.
Distinct sections for B2B and B2C supplies in Table-12 for improved clarity.
A “Download HSN Codes List” feature for quick access to updated HSN & SAC codes.
Enhanced search function to auto-fill HSN details based on product descriptions.
Authorities will announce further compliance measures in upcoming phases to ensure greater accuracy in GST reporting and minimize errors.
To maintain smooth GST filing and compliance, businesses must stay informed about these regulatory updates and adapt their reporting systems accordingly. Ensuring adherence to the latest HSN validation rules will help avoid discrepancies and facilitate seamless tax compliance.
Stay updated and prepare for a hassle-free GST reporting experience!
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