Phase III HSN Code Implementation in GSTR-1 and GSTR-1A: GSTN issues GST Advisory [Read Guidelines]

The Goods and Services Tax Network ( GSTN ) has announced the commencement of Phase-III of the mandatory HSN code implementation for GSTR-1 and GSTR-1A, effective from the return period of January 2025. This phase introduces significant changes aimed at enhancing accuracy and compliance in reporting HSN (Harmonized System of Nomenclature) codes.

Updates in Phase-III:

1. Dropdown Selection for HSN Codes:

○ Manual entry of HSN codes has been discontinued.
○ Taxpayers must now select the correct HSN code from a predefined dropdown list.

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2. Bifurcation of Table-12:

○ Table-12 of GSTR-1 and GSTR-1A has been divided into two tabs:
■ B2B (Business-to-Business)
■ B2C (Business-to-Consumer)
○ This segregation enables separate reporting of supplies.

3. Validation of Supplies and Tax Amounts:

○ Automated validation for values of supplies and corresponding tax amounts has been introduced for both B2B and B2C tabs.
○ Initially, these validations will function in a warning mode. Taxpayers failing to meet validation criteria can still proceed with filing, though warnings will show discrepancies.

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Implications for Taxpayers:

● The dropdown feature for HSN codes aims to eliminate errors caused by manual entries.
● The bifurcation of Table-12 ensures a clearer distinction between B2B and B2C transactions.
● The warning mode for validations during the initial phase provides taxpayers time to adapt.

In Short, the key updates include dropdown HSN selection, bifurcation of Table-12 into B2B and B2C tabs, and initial warning-mode validations.
Subscribers can access the Detailed Advisory by clicking the Blue button below.

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