Introduction

India’s Goods and Services Tax (GST) framework continues to evolve in its journey toward increased transparency, digitization, and ease of compliance. As part of this ongoing transformation, the Goods and Services Tax Network (GSTN) has introduced a major structural reform in GSTR-1 return filing beginning May 2025.

This change is both technical and strategic in nature. Table-12 of GSTR-1, which previously grouped HSN-wise supply summaries in a single format, has now been bifurcated into two distinct sections:

• Table 12A – covering Business-to-Business (B2B) sales

• Table 12B – covering Business-to-Customer (B2C) sales

This reform aims to significantly improve data accuracy, supply classification, and compliance monitoring—while easing the burden on honest taxpayers and improving the utility of GST data for governance, enforcement, and policy design.

Read more: TDS Changes Effective from 1st April 2025: Key Updates for Taxpayers

Understanding the Core of the Reform

Prior to this update, all HSN-wise summaries were reported under a single table (Table 12) in GSTR-1, regardless of whether the supply was to a business or to a consumer. This often led to data aggregation issues, improper classification of B2B vs B2C transactions, and additional scrutiny due to mismatches in ITC claims.

To resolve this, the GSTN has introduced a split format:

• Table 12A is exclusively for HSN-wise summaries of B2B supplies. These are sales made to registered businesses, where ITC is claimed by the recipient.

• Table 12B is meant for HSN-wise summaries of B2C supplies. These are sales made to unregistered consumers, typically without any ITC implications.

While the HSN summary in Table 12A is mandatory, it is currently implemented in “warning mode”, meaning the return will still be accepted even if the HSN field is left blank or partially filled. This soft launch approach gives businesses time to adjust, but it is expected that this will become fully validated and enforced in subsequent phases.

B2B vs B2C Reporting Structure – What’s New

The bifurcation addresses a fundamental gap in GST return design. B2B transactions directly impact ITC reconciliation, while B2C transactions have implications for supply tracking, valuation, and consumer-level analytics. Separating these in the return format allows the GSTN to:

• Detect errors or fraud more accurately

• Auto-populate future returns using e-invoice data

• Enable faster cross-verification of ITC claims

• Support policy-level decisions based on trade patterns

Here’s a quick comparison of the new structure:

This format also prepares businesses for future system upgrades, including auto-populated GSTR-1 based on e-invoice data and real-time HSN validations.

Strategic Importance of the Table-12 Split

This reform is not just a technical restructuring; it is a strategic enabler for India’s data-driven tax policy model. With increasing digital penetration and government focus on automation, granular data is now central to:

• Plugging tax leakages

• Detecting circular trading and false ITC claims

• Conducting sectoral trade and revenue analytics

• Enabling pre-filled return filing models for small businesses

As per a senior official from the GST Council, this move aligns with the government’s vision for plug-and-play compliance, where businesses can file returns accurately and efficiently without depending on complex offline calculations or reconciliations.

The official emphasized that accurate HSN data will help reduce classification disputes, build trust with compliant taxpayers, and make the overall tax ecosystem more predictable.

Read more: Updates on Mandatory Six-Digit HSN Codes for B2B Transactions and Exporters

Long-Term Benefits of This Update

With this foundation now laid, GSTN is paving the way for several upcoming enhancements such as:

• Direct linking of Table 12A with e-invoices

• Real-time validation of HSN data across returns

• Elimination of manual errors in GSTR-1

• Improved reconciliation between GSTR-1, GSTR-3B, and GSTR-2B

• Better ITC matching between supplier and recipient returns

In essence, the move towards distinct B2B and B2C HSN summaries reflects the growing maturity of India’s indirect tax regime. Businesses that adapt early will benefit from fewer audits, reduced classification challenges, and smoother ITC settlements.

How CaptainBiz Makes This Transition Effortless

For businesses that rely on manual entries or outdated accounting tools, adapting to these changes can be overwhelming. That’s where CaptainBiz comes in.

CaptainBiz is already compliant with the May 2025 GSTR-1 Table-12 structure, offering seamless automation that eliminates human error and ensures accurate classification between B2B and B2C sales.

Here’s how CaptainBiz supports businesses:

With CaptainBiz, GST compliance becomes not just easier, but also smarter. Your business will always remain aligned with the latest GSTN updates, giving you peace of mind and audit safety.

Conclusion

The separation of business and customer sales in Table-12 of GSTR-1 is a critical leap toward a transparent, efficient, and intelligence-driven GST framework. By encouraging clear classification and enabling structured data reporting, the GSTN is setting the stage for future-ready compliance tools, automated reconciliation, and sector-focused tax policy decisions.

Businesses that adapt to this shift using solutions like CaptainBiz will not only stay compliant but also enjoy smoother audits, better cash flow through faster ITC, and confidence in a system built on digital trust.

To prepare for GST’s data-driven future, start your free trial with CaptainBiz today at www.captainbiz.com — your smart partner for accurate and automated GST compliance.

Frequently Asked Questions (FAQs)

1. What is the latest change in GSTR-1 from May 2025?

The GSTN has split Table-12 into two parts: Table 12A for B2B HSN-wise supplies and Table 12B for B2C HSN-wise supplies. The aim is to improve classification and reporting accuracy.

2. Is it mandatory to fill HSN details in both Table 12A and 12B?

Yes, Table 12A is mandatory. However, Table 12B is optional if the taxpayer’s turnover is below ₹5 crore. The system currently accepts both with partial data under “warning mode”.

3. What happens if I leave the HSN column blank?

As of now, the return can still be filed under warning mode. But this is temporary. Businesses are encouraged to fill complete HSN data to avoid future rejection or scrutiny.

4. How does this affect reconciliation and ITC?

B2B HSN data directly affects ITC matching for your buyers. Inaccurate or missing HSN data can cause mismatches, leading to disputes or delay in credit availability for your clients.

5. Will this change apply to small businesses and startups too?

Yes. All regular taxpayers filing GSTR-1 will have to comply with this structure. However, businesses with turnover up to ₹5 crore have some flexibility in B2C HSN reporting.

6. Is this change aligned with e-invoice systems?

Yes. It is part of a broader push to link GSTR-1 with e-invoice data, where HSN codes from invoices will auto-fill return fields. CaptainBiz already supports this structure.

7. How can I ensure my HSN data is correct and accepted by the portal?

Use a system like CaptainBiz that integrates HSN validation, product master setup, and return pre-checks before final filing. This helps in eliminating any inconsistencies.

8. Will GST audits and scrutiny become stricter due to this change?

With enhanced data separation and real-time tracking, audits will become more data-dependent. Proper HSN reporting will significantly reduce audit risks and penalties.

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