Mandatory Reporting of 4-Digit HSN Code in GSTR-1

REPORTING OF 4-DIGIT HSN CODES IN GSTR-1 WITH TURNOVER UPTO

RS.5 CRORE

What is HSN Code?

HSN stands for Harmonised System of Nomenclature code, it is an internationally standardized system of names and numbers to classify traded products. It came into effect in 1988 and has since been developed and maintained by the World Customs Organization (WCO) (formerly the Customs Co-operation Council), an independent intergovernmental organization based in Brussels, Belgium, with over 200 member countries.

India was originally using 6-digit HSN codes to classify commodities for Customs and Central Excise. Later Customs and Central Excise added two more digits to make the codes more precise, resulting in an 8-digit classification.

The HSN structure contains 21 sections, with 99 Chapters, about 1,244 headings, and 5,224 subheadings. Each Section is divided into Chapters. Each Chapter is divided into Headings. Each Heading is divided into Sub Headings.

Section and Chapter titles describe broad categories of goods, while headings and subheadings describe products in detail. The purpose of HSN codes is to make GST systematic and globally accepted.

HSN codes will remove the need to upload a detailed description of the goods. This will save time and make filing easier. Rule 46 of Central Goods and Service Tax Rules, 2017 provides for matters concerning HSN Codes.

As per Notification No. 78/2020 – Central Tax dated 15th October 2020, it is mandatory for the taxpayers to report a minimum 4-digit or 6 digits HSN Code in table-12 of GSTR-I on the basis of their Aggregate Annual Turnover (AATO) in the preceding Financial Year. To facilitate the taxpayers, these changes are being implemented in a phase-wise manner on GST Portal.

Part I & Part II of Phase 1 have already been implemented from 01st April 2022 & 01st August 2022 respectively and are currently live on the GST Portal. From 01st November 2022, Phase-2 would be implemented on GST Portal, and taxpayers with up to Rs 5 crore turnover would be required to report 4-digit HSN codes in their GSTR-1.