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

Serial Number	Annual Turnover in the preceding Financial Year	Number of Digits of Harmonised System of Nomenclature Code (HSN Code)	Relief if any
1.	Upto 1.5 Crore	Nil	No requirement to mention HSN.
2.	More than 1.5 Crore But upto 5 Crore	2	Compulsory for Both B2B and B2C
3.	More than 5 Crore	4	Compulsory for Both B2B and B2C

 

– 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

Serial Number	Aggregate Turnover in the preceding Financial Year	Number of Digits of Harmonised System of Nomenclature Code (HSN Code)	Relief if any
1.	Upto 5 Crore	4	May not mention the number of digits of HSN Code, in  a  tax  invoice  issued  by  him under the said rules in respect of supplies made to unregistered persons
2.	More than 5 Crores	6	COMPULSORY

– 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.

S.No.	Chemical name	HSN Code
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)methyl methyl methylphosphonate	29313600
4	Bis[(5-Ethyl-2-methyl-2-oxido-1,3,2-dioxaphosphinan-5-yl)methyl] methylphosphonate	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)ethylchloride 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

  Also Listen: Understand The Role of SAC Codes and GST Rates 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