The Goods and Services Tax Network ( GSTN ) declared the start of Phase III of the mandatory HSN code implementation for GSTR-1 and GSTR-1A, which comes into force from the return period of January 2025.
It introduces the amendments objecting to improve the precision and compliance in notifying the HSN (Harmonized System of Nomenclature) codes.
Phase III Update for HSN Code
- Dropdown Selection for HSN Codes
- Manual entry of HSN codes has been stopped
- Taxpayers should select the accurate HSN code from a predefined dropdown list
Table-12 Bifurcation
Table 12 of GSTR-1 and GSTR-1A has been separated into two tabs:
| B2B (Business-to-Business) | B2C (Business-to-Consumer) |
This segregation facilitates separate reporting of supplies.
Validation of Supplies and Tax Amounts:
- Automated validation for values of supplies and related tax amounts has been introduced for both B2B and B2C tabs.
- These validations will operate in a warning mode. The taxpayers unable to fulfill the validation criteria could proceed with filing but warnings will specify the discrepancies.
Impact on Taxpayers
- The dropdown component for HSN codes seeks to eradicate errors caused by manual entries.
- The bifurcation of Table 12 ensures a clearer distinction between B2B and B2C transactions.
- The warning mode for validations in the initial phase furnishes taxpayers time to adjust.
Briefly, the updates comprise the dropdown HSN selection, bifurcation of Table-12 into B2B and B2C tabs, and initial warning-mode validations.
