HSN

 HSN Code System Under GST

1. Turnover under ₹1.5 crore: No requirement to use HSN codes.
2. Turnover between ₹1.5 crore and ₹5 crore: Mandatory use of 2-digit HSN codes.
3. Turnover over ₹5 crore: Requirement to use 4-digit HSN codes.
4. Importers and exporters: Must use 8-digit HSN codes.
5. 
   
6. CLARIFICATION ON REPORTING 4-DIGIT/6-DIGIT HSNS
7. GST helpdesk is in receipt of some tickets at helpdesk wherein it was reported that certain 6-digit HSN codes are not available in
8. HSN Master/ not accepted on e-invoice/e-Way bill portals.
9. Background: Notification No. 12/2017-Central Tax dated June 28, 2017, as amended vide Notification No. 78/2020 – Central
10. Tax, dated October 15, 2020, mandates taxpayers to declare specified digits, as follows, of Harmonised System of Nomenclature
11. (HSN) / Service Accounting Code (SAC) Code on raising of tax invoices, w.e.f. April 1, 2021.
12. S. No. Aggregate Turnover in the preceding
13. Financial Year Number of Digits of HSN Code
14. 1. Upto INR 5 crores 4
15. 2. More than INR 5 crores 6
16. It may be noted that specific 6-digit HSNs, as available in the HSN/Customs Tariff (with corresponding description of goods) are
17. allowed in the system. It also follows that the declaration of HSN at 4/6 Digits has to be out of valid HSN codes only.
18. However, there are instances that some taxpayers are trying to report truncated first 6-digits out of an otherwise valid 8-digit
19. HSN; which are actually not available in Tariff at 6-digit level and with no corresponding description of goods; these are invalid
20. and hence not being allowed in the System.
21. Taxpayers may, therefore note that based on the harmonious interpretation of the Notifications, as referred above, read with
22. Customs Tariff Act, 1975, as made applicable to GST; the number of digits of HSN, as specified vide Notifications No. 12/2017 &
23. 78/2020 (Central Tax), are the minimum number of digits of HSN to be mentioned on the invoice.
24. Example: Where HSN 6 digits are specified to be reported in invoice, valid HSN codes as available in tariff, at both 6-digits and
25. 8-digits can be mentioned. Similarly, where HSN at 4-digits are specified, valid HSN codes as available in tariff, at 4-digit, 6-digit
26. and 8-digit can be mentioned. However, the 4/6 Digit HSN Codes, which are not available in the tariff; along with specific
27. description, Unit and GST Rate; are not allowed to be mentioned.
28. Further, if the HSN of any Goods/Service is otherwise valid but not accepted on GST Portal / e-invoice Portal / e-way Bill
29. portal, please raise a ticket on GST Self-Service Portal: https://selfservice.gstsystem.in/ > Report Issue > Type ‘HSN’ in ‘Type
30. of Issue/Concern’ search box > Select relevant sub-category, e.g. ‘e-Invoice – IRP – HSN Code related’.