Introduction
The Central Board of Indirect Taxes and Customs (CBIC) has issued an important clarification via its official X account (formerly Twitter) on June 10, 2025, in response to a recent advisory by the GSTN (Goods and Services Tax Network). This update pertains to the reporting of HSN codes in Table 12 of GSTR-1, a mandatory compliance section for all registered GST taxpayers.
The key takeaway from CBIC’s clarification is this: HSN codes are mandatory for all B2B supplies, while for B2C supplies, the HSN code is optional if the taxpayer’s aggregate turnover in the previous financial year was up to ₹5 crore.
This clarification follows the GSTN system update implemented from May 1, 2025, which bifurcated Table 12 into two sections — one for B2B transactions and another for B2C transactions. The system now applies validations and summary requirements only to B2B transactions.
Clarification Based on Existing GST Law: Notification No. 12/2017-Central Tax
The CBIC has reinforced that this compliance rule is not new but is based on Notification No. 12/2017-Central Tax dated June 28, 2017, as amended from time to time. According to this notification, any registered person with an aggregate turnover of up to ₹5 crore in the previous financial year may choose not to mention HSN codes in invoices issued for B2C supplies — that is, supplies made to unregistered persons.
However, this exemption does not apply to B2B invoices, which are issued to registered persons. In those cases, HSN code declaration continues to be compulsory, irrespective of the supplier’s turnover. CBIC’s latest clarification makes this legal stance even clearer in light of recent updates to the GSTN portal.
Read more: CBIC’s Latest Notification Brings 30-Day RCM Invoicing Rule into Effect
GSTN Portal Update: Changes Effective from May 1, 2025
As per the advisory issued by GSTN on May 1, 2025, the Table 12 of GSTR-1/1A has been restructured into two distinct sections. One section is dedicated to B2B supplies, while the other is for B2C supplies. Each section must now be filled separately to ensure more structured reporting.
To enhance data accuracy and alignment, the GSTN has introduced system validations. These validations cross-check the HSN-wise values declared in Table 12 with the amounts reported in other return tables. This mechanism ensures consistency and prevents filing errors.
In this update, the B2B HSN summary is mandatory and validated, while the B2C HSN section is optional for eligible small taxpayers, with no validation checks or mandatory entry requirement.
Breakdown of HSN Code Applicability in GSTR-1 Based on Turnover and Supply Type
To make compliance easier to understand for taxpayers, here is a detailed comparison based on turnover and nature of supply:| Annual Turnover | Type of Supply | HSN Code in Invoice | HSN Entry in GSTR-1 Table 12 |
|---|---|---|---|
| Up to ₹5 crore | B2B (to registered) | Mandatory | Mandatory |
| Up to ₹5 crore | B2C (to unregistered) | Optional | Optional (Can be left blank) |
| Up to ₹5 crore | B2B (to registered) | Mandatory | Mandatory |
| Up to ₹5 crore | B2C (to unregistered) | Mandatory | Mandatory |
System Behavior in GSTR-1 Filing After Update
From May 1, 2025, GSTR-1 filing behavior has changed to align with the CBIC’s clarification. Here is a technical summary of how the GSTN system functions post-update:| Table Section in GSTR-1 | Target Supply Type | HSN Code Requirement | System Validation Appliex |
|---|---|---|---|
| B2B Supplies Tab | Registered Buyers | Compulsory Entry | Yes |
| B2C Supplies Tab | Unregistered Buyers | Optional for Turnover ≤ ₹5 | No |
How CaptainBiz Makes GSTR-1 Filing Simple and Compliant
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Stay updated with every CBIC and GSTN notification through in-app alerts.
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Whether you’re selling to businesses or consumers, CaptainBiz ensures full compliance with the latest GST laws — without the hassle.
Conclusion
The CBIC’s clarification has brought much-needed transparency to HSN code reporting requirements under GSTR-1. For businesses with turnover below ₹5 crore, this update offers the flexibility to skip HSN codes in B2C invoices. However, B2B reporting remains strictly governed with mandatory HSN entry and system validations.
As the GSTN platform evolves, compliance becomes increasingly technical, but with tools like CaptainBiz, you can stay ahead and file accurately, every time.
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Frequently Asked Questions (FAQs)
1. What is the meaning of HSN code, and why is it used in GSTR-1?
HSN (Harmonized System of Nomenclature) codes classify goods for tax purposes. Including them in GSTR-1 helps standardize reporting and allows authorities to track the supply of specific categories of goods.
2. Is it mandatory to mention HSN codes in all invoices?
HSN codes are mandatory in all B2B invoices. For B2C invoices, if your turnover is up to ₹5 crore in the previous financial year, you have the option to omit the HSN code.
3. What happens if I don’t fill the B2C tab in GSTR-1 Table 12?
If your business qualifies under the exemption (turnover up to ₹5 crore), the B2C HSN tab is not mandatory, and the system will allow you to proceed without any error.
4. Can I still enter HSN codes for B2C transactions if it’s not required?
Yes. Even if it is optional, you can choose to include HSN codes for B2C transactions. This may be useful for internal recordkeeping or future reference.
5. Are service providers also covered under this clarification?
Yes, both goods and service providers are required to follow the same HSN code rules based on their turnover and supply type.
6. How can I know if my turnover was below ₹5 crore?
Turnover is calculated based on your aggregate turnover in the previous financial year. You should refer to your financial records or consult your accountant to determine this.
7. What if I mistakenly skip entering HSN for a B2B supply?
The GSTN portal has validations that will flag this error. You must correct it before successfully filing your return.
GSTR-1 HSN Code Made Simple – Know What’s Mandatory & What’s Not.
