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
| If supplied to the registered person | 4 |
| If supplied to unregistered person | NIL |
- For turnover over 5 crores :
| If supplied to registered person | 6 |
| If supplied to unregistered person | 6 |
- For Exporters :
| If supplied to registered person | 8 |
| If supplied to unregistered person | 8 |
- 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
- 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
- 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
| S. No. | Chemical name | HSN Code |
|---|---|---|
| (1) | (2) | (3) |
| 1 | Mixture of (5-ethyl-2-methyl-2-oxido-1,3,2- dioxaphosphinan-5-yl) methyl methyl methylphosphonate (CAS RN 41203-81-0) and Bis [(5-Ethyl-2-methyl-2-oxido-1,3,2-dioxaphosphinan-5-yl)methyl] methylphosphonate (CAS RN42595-45-9) | 38249100 |
| 2 | Dimethyl propylphosphonate | 29313200 |
| 3 | (5-Ethyl-2-methyl-2-oxido-1,3,2-dioxaphosphinan-5-yl) methy lmethy l methy l phosphonate | 29313600 |
| 4 | Bis[(5-Ethyl-2-methyl-2-oxido-1,3,2-dioxaphosphinan-5-yl)methyl ] methy l phosphonate | 29313700 |
| 5 | 2,4,6-Tripropyl-1,3,5,2,4,6-trioxatriphosphinane 2,4,6-trioxide | 29313500 |
| 6 | Dimethyl methylphosphonate | 29313100 |
| 7 | Diethyl ethylphosphonate | 29313300 |
| 8 | Methylphosphonic acid with ( aminoiminomethyl) urea ( 1: 1) | 29313800 |
| 9 | Sodium 3-(trihydroxysilyl) propyl methylphosphonate | 29313400 |
| 10 | 2,2-Diphenyl-2-hydroxyacetic acid | 29181700 |
| 11 | 2-(N,N-Diisopropylamino) hydrochloride | 29211400 |
| 12 | 2-(N,N-Dimethylamino) ethylchloride hydrochloride | 29211200 |
| 13 | 2-(N,N-Diethylamino) ethylchloride hydrochloride | 29211300 |
| 14 | 2-(N,N-Diisopropylamino) ethanol | 29221800 |
| 15 | 2-(N,N-Diethylamino) ethanethiol | 29306000 |
| 16 | Bis (2-hydroxyethyl) sulfide | 29307000 |
| 17 | 2-(N,N-Dimethylamino) ethanethiol | 29309092 |
| 18 | Product from the reaction of Methylphosphonic acid and l,3,5-Triazine-2,4,6- triamine | As applicable |
| 19 | 3-Quinuclidinol | 29333930 |
| 20 | R-(- )-3-Quinuclidinol | 29333930 |
| 21 | 3,9-Dimethyl-2,4,8,10-tetraoxa-3,9-diphosphaspiro [5.5] undecane 3,9- dioxide | 29313900 |
| 22 | Propylphosphonic dichloride | 29313900 |
| 23 | Methylphosphonic dichloride | 29313900 |
| 24 | Diphenyl methylphosphonate | 29313900 |
| 25 | O-(3-chloropropyl)O-[4-nitro-3-(trifluoromethyl)phenyl] methylphosphonothionate | 29313900 |
| 26 | Methylphosphonic acid | 29313900 |
| 27 | Product from the reaction of methylphosphonic acid and 1,2-ethanediamine | As applicable |
| 28 | Phosphonic acid, methyl-, polyglycol ester (Exolit OP 560 TP) | 38249900 |
| 29 | Phosphonic acid, methyl-, polyglycol ester (Exolit OP 560) | 38249900 |
| 30 | Bis (polyoxyethylene) methylphosphonate | 39072090 |
| 31 | Poly(1,3-phenylene methyl phosphonate) | 39119090 |
| 32 | Dimethylmethylphosphonate, polymer with oxirane and phosphorus oxide | 38249900 |
| 33. | Carbonyl dichloride | 28121100 |
| 34. | Cyanogen chloride | 28531000 |
| 35. | Hydrogen cyanide | 28111200 |
| 36. | Trichloronitromethane | 29049100 |
| 37. | Phosphorus oxychloride | 28121200 |
| 38. | Phosphorus trichloride | 28121300 |
| 39. | Phosphorus pentachloride | 28121400 |
| 40. | Trimethyl phosphite | 29202300 |
| 41. | Triethyl phosphite | 29202400 |
| 42. | Dimethyl phosphite | 29202100 |
| 43. | Diethyl phosphite | 29202200 |
| 44. | Sulfur monochloride | 28121500 |
| 45. | Sulfur dichloride | 28121600 |
| 46. | Thionyl chloride | 28121700 |
| 47. | Ethyldiethanolamine | 29221720 |
| 48. | Methyldiethanolamine | 29221710 |
| 49. | Triethanolamine | 29221500 |
