Must Know Before Using HSN Code on GST Invoices from FY22

There are 16 bullet points we should keep in mind while mentioning HSN Code in GST Invoice from this FY means the financial year 2021-22. Mandating the mention of HSN code on all tax invoices was a major change business had to go through.

Those 16 major points to consider in this new provision are:

• The amendment extends the previous amendment made in Notification 12/2017-Central Tax via Notification No. 78/2020 released on 15/12/2020.
• HSN Digits for turnover up to 5 cores

• For turnover over 5 crores :

• For Exporters :

• According to Point 2 above, If turnover is below 5 crores, then it is optional for mentioning HSN code in B2C invoices.
• The 49 chemicals specified in the enclosed Annexure are to be shown as compulsorily 8 digits as per notification number 90/2020 released on December 1, 2020.
• According to points 3, 4 and 5 above, it is compulsory to mention the minimum digits in Table 12 of GSTR 1 Get the complete guide for online filing GSTR 1 form in a step by step manner. Also, we have covered its due dates, penalty, important terms, and general queries. Read more .
• According to points 3, 4 and 5 above, it is also compulsory to mention the minimum digits in Tax Invoices.
• The HSN digits have to be reported according to the total turnover for the preceding financial year.
• These 8-digit HSN Codes will also have to be mentioned on export invoices under the Foreign Trade Policy.
• These 8 digits ITC (HS) will be also mentioned on the export invoices as per requirement under Foreign Trade Policy and not under GST regime Let us get to know the overall GST scenario from past 2 years and what the future it has. SAG Infotech brings you some insight in the GST regime. Read more .
• There is a need to pay special attention to the tax rates since different items with just minor differences in the composition of the items will carry different HSN digits.
• Each and every tax invoice must contain HSN digits along with a description of goods and especially the tax rate for better transparency and to avoid any future litigation.
• A minor description change completely changes the tax rate as well as HSN code. A detailed explanation as to point 12 above will be an open disclosure in the event of any litigation or confusion.
• Government is implementing “Text Mining through ADVAIT” in the Regulatory Framework, it will be really easy for the department to track HSN mismatches and mistakes in tax invoices, E Way Bill, GSTR 1, GSTR 9, AOC 4, Registration Certificate, Cost Audit Report, Shipping Bill and Bill of Entry, and issuing of notices for penalizing Businesses automatically.
• There is also a Penalty of Rs. 50,000 to make a mistake relating to this particular scenario under Section 125 of GST.

49 Chemicals Specified in the Enclosed Annexure that Attract HSN Digit 8 in Tax Invoice