GSTN issues GST Advisory on mandatory mentioning of HSN codes in GSTR-1 & GSTR 1A

 The Goods and Services Tax Network ( GSTN ) has issued an advisory on the mandatory mentioning of Harmonized System Nomenclature Code (HSN Code) in the Goods and Services Tax (GST) Returns GSTR-1 and GSTR-1A.
 
The advisory stated as follows: —
“After successful implementation of Phase-I & Phase-II now Phase-III regarding Table 12 of GSTR-1 & 1A is being implemented, from the return period February 2025. In this phase manual entry of HSN has been replaced by choosing correct HSN from given Drop down. Also, Table-12 has been bifurcated into two tabs namely B2B and B2C, to report these supplies separately. Further, validation regarding values of the supplies and tax amounts involved in the same, have also been introduced for both the tabs of Table-12. However in initial period these validations have been kept in warning mode only, which means failing the validation will not be a blocker for filling of GSTR-1& 1A.”

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Detailed Advisory on HSN Validations in Table 12 of GSTR-1 earlier released by GSTN is reproduced here for convenience.

1. Mandatory Reporting of HSN Codes

• As per Notification No. 78/2020 – Central Tax (dated October 15, 2020), taxpayers must report either 4-digit or 6-digit HSN codes in Table 12 of GSTR-1, depending on their Aggregate Annual Turnover (AATO) in the previous financial year.
• These rules are being implemented in phases on the GST portal:
  • Phase 2: Effective from November 1, 2022.
  • Phase 3: Takes effect for the return period starting February 2025.
  • Phase 4: Details to be announced later.

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Below is a quick overview of the changes in Phase 2 and Phase 3:

Phases	Taxpayers with AATO up to ₹5 Cr	Taxpayers with AATO above ₹5 Cr
Phase 2	- Must report 4-digit HSN codes for goods & services.- Manual user entry is allowed (HSN or description).- A warning/alert will appear if the HSN is manually entered or found incorrect, but GSTR-1 can still be filed.	- Must report 6-digit HSN codes for goods & services.- Manual user entry is allowed (HSN or description).- A warning/alert will appear if the HSN is manually entered or found incorrect, but GSTR-1 can still be filed.
Phase 3	- Must continue to mandatorily report 4-digit HSN codes.	- Must report 6-digit HSN codes. - Manual user entry of HSN is not allowed. HSN must be selected from a dropdown list. - “Description as per HSN Code” will auto-populate from the HSN master.

2. Validations for Supply Values in Table 12

• New validations compare the B2B supply values reported in other tables (4A, 4B, 6B, 6C, 8 with recipient registered, 9A, 9B registered, 9C registered, 15, 15A with recipient registered) to the total B2B values reported in Table 12.
• Similarly, B2C supply values reported in tables (5A, 6A, 7A, 7B, 8 with recipient unregistered, 9A export/B2CL, 9B unregistered, 9C unregistered, 10, 15 unregistered, 15A unregistered) will be checked against B2C values in Table 12.
• For amendments, only the differential value is considered during validation.
• Important: Currently, these checks only generate a warning if there’s a mismatch. Taxpayers can still file GSTR-1 despite the warning. However, if B2B supplies are reported in other tables, the B2B tab in Table 12 cannot be left blank.

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here

3. Additional Enhancements

1. Table 12 is now split into two tabs: “B2B Supplies” and “B2C Supplies.” Taxpayers should separately enter HSN details for each category.
2. A new “Download HSN Codes List” button lets taxpayers download an Excel file of updated HSN & SAC codes (goods and services) with their descriptions.
3. The “Product Name as in My Master” search function is now available. When a user selects a product name from their HSN Master

• HSN cod
• Description as per HSN
• UQC and Quantity will auto-populate. (This feature is optional.)

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