HSN Code Requirement in Invoice in GST

Update from National Informatics Centre:

Enhancements to E-Way Bill System – HSN Code Requirements (Date: 05-01-2023)

– In alignment with Notification No. 78/2020-Central Tax from 15th October 2020, businesses recording an Annual Aggregate Turnover (AATO) exceeding Rs. 5 Crores are now required to furnish a minimum 6-digit HSN code for all B2B and international transactions. For businesses with AATO below Rs. 5 Crores, the mandate is to provide a 4-digit HSN code.

– These requisites will be integrated into the e-way bill system starting 15th February 2024. We urge all affected taxpayers to update their invoicing systems accordingly to incorporate the 4 or 6-digit HSN codes when generating e-way bills online or via API after this date.

How Does this Impact You?

Now you need to Generate E-way Bills containing 4-digit or 5-digit HSN codes as per the applicability from 15^th Oct 2020, as this lock will be Implemented by NIC on E-way Bill Portal.

HSN Code Requirements on Invoice

What is HSN Code?

– A harmonised system of Nomenclature (HSN) Has been adopted for the classification of goods. The harmonised commodity description and coding system also known as the harmonised system of tariff nomenclature is an internationally standardised system of names and numbers to classify traded products. The World Customs Organisation (WCO) Has been administering a 6-digit HS course schedule. The HS courts have been used for import-export trades all over the world.

– Accordingly, the supplies need to be embarked with HSN code for goods and Service Accounting Codes (SAC) for Services.

– It shall be mandatory in the case of exports and imports to specify the HSN code at 8 digits and the accounting code for services.

– 1^st Proviso to Rule 46 – Tax Invoice

(Substituted vide Notification No. 79/2020-CT dated 15.10.2020)

“ Provided that the Board may, on the recommendations of the Council, by notification, specify-

(i) the number of digits of Harmonised System of Nomenclature code for goods or services that a class of registered persons shall be required to mention; or

(ii) a class of supply of goods or services for which specified number of digits of Harmonised System of Nomenclature code shall be required to be mentioned by all registered taxpayers; and

(iii) the class of registered persons that would not be required to mention the Harmonised System of Nomenclature code for goods or services “

– Notification No. 12/2017 –Central Tax dated 28^th Jun 2017

For Period from 1^st July 2017 till 31^st March 2021

– Notification No. 78/2020 –Central Tax dated 15^th Oct 2020

As per this Notification w.e.f 1^st April 2021, the following is requirements of the HSN Code

– Notification No. 90/2020 –Central Tax dated 1^st Dec 2020

Vide this Notification, CBIC has specified the names of 49 Chemicals in respect of which the registered person shall be required to mention 8 digits of HSN codes in the tax invoice issued by him.

Disclaimer –

Please note that the insights shared here are based solely on my personal interpretation of the GST Law, aimed at enhancing general understanding. These views should not be considered as professional advice. For specific circumstances and detailed interpretation, consulting the GST Law directly is advisable. This is shared in good faith, and I am not responsible for any implications arising from the use of this information.

CA Gitesh S. Bajaj

Gitesh Bajaj & Associates

Aurangabad

Ph. 9403586219

📧: Gitesh.Bajaj@gbassociates.org

How do I determine the correct HSN code for a chemical product

Gitesh Bajaj Self-employed

Chartered Accountant specializing in Indirect Taxation and GST, registered with ICAI. Experienced in managing GST Annual Returns for corporations, conducting GST-focused Internal Audits, and filing various GST returns. Knowledgeable in SEZ, EOU & FTP Compliances.

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