With effect from the 1st April 2021, it has been made necessary for a GST taxpayer, having turnover of more than Rs 5 crore in the preceding financial year, to provide 6 digits HSN Code (Harmonised System of Nomenclature Code), or as the case may be, SAC (Service Accounting Code) on the invoices published for supplies of taxable goods and services. In this article, we will discuss on HSN Code / SAC mandatory on GST Tax Invoices from 1st April 2021.
HSN Code / SAC mandatory on GST Tax Invoices from 1st April 2021
The central government has announced the notification for the taxpayer having a turnover of up to Rs 5 crore in the preceding financial year is compelled to mandatory furnished 4 digits HSN code on B2B invoices. Earlier, the requirement was 4 digits and 2 digits respectively.
HSN codes for goods at 6 digits are universally common. Therefore, common HSN codes apply to Customs and GST. Accordingly, codes specified in the Customs tariff are used for GST objectives too (as has been particularly referred to in the GST rate schedule).
Also, the GST rate schedule for goods and services may be accessed and then start the path GST Rates, Updated Notifications. Read full updated Notification.
HSN or SAC code Mandatory for businesses turnover more than Rs 5 Crore
With effect from the 1st April, 2021, it has been made mandatory for a GST taxpayer, having turnover of more than Rs 5 crore in the foregoing financial year, to provide 6 digits HSN Code or as the case may be, SAC on the invoices issued for supplies of taxable goods and services.
HSN or SAC code Mandatory for businesses turnover Up to Rs 5 Crore
A taxpayer having a turnover of upto Rs 5 crore in the preceding financial year is required to mandatorily provide with 4 digits HSN code on B2B invoices.
HSN Code in GSTR-1
Just like it is mandatory to mention HSN code at 6 and 4 digits on invoices, GST returns too requires to be reported with HSN code. Businesses with an aggregate turnover exceeding 5 crores in the preceding financial year, expect to upload HSN overview with 6 digits HSN code in GSTR-1 starting from 1st April, 2021.
In the same way, businesses with an aggregate turnover up to 5 crores, require to upload HSN summary with 4 digits HSN code in GSTR-1 return. However, businesses can select to mention HSN code at additional digits optionally. Businesses up to 5 cores can mention HSN at 6 or 8 digits and businesses exceeding 5 crores, can optionally illustrate HSN at 8 digits.
If you are filing monthly GSTR-1, you require to report the HSN details in April month’s GSTR-1, to be filed in May,2021. In case of quarterly GSTR-1, you require to provide the details at 4 digits in April to June’21 GSTR-1, to be filed in July,2021.
Further Notification by Central Government
Further, the HSN search facility is also accessible on the GST portal.
Manufacturers and importers/exporters have been generally using HSN Codes. Manufacturers were providing these codes even in the pre-GST regime. Importers and exporters have been providing these codes in import/export documents.
Merchants would mostly be utilizing HSN codes furnished in the invoices allocated to them by the manufacturer or importer suppliers. As such, an enormous number of GST taxpayers are already providing HS codes/SAC at 6/8 digits on an instinctive basis on the invoices, e -waybills, and GSTR 1 returns.
Download E-Startup Mobile App and Never miss the freshest updates narrating to your business.