hsn code

HSN Code Mandatory On Invoices From 1st April 2021

Gaurav Yadav

Updated on February 2nd, 2024

What is HSN code update?

Central Board of Indirect Taxes and Customs (CBIC) has released a small reminder for the GST taxpayers about the HSN (Harmonized System of Nomenclature)code being made mandatory on all the invoices.

This reminder comes in reference to the ‘Notification No. 79 /2020 – Central Tax’ which makes GST HSN code mandatory on all the B2B invoices w.e.f. 1st April 2021.

CBIC issued this reminder to nudge the GST taxpayers about this amendment which was brought about on 15th October 2020.

In this short article, we will discuss some features you need to know about this amendment so that the taxpayers can refresh their information base and prepare for this change accordingly.

 CBIC 2021 Update in Brief

hsn code under gst

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This update concerns various groups of taxpayers. We'll discuss these groups one by one for ease of understanding.

HSN code turnover limit & HSN code applicability

1

Taxpayers with MORE than INR 5 Crore aggregate turnover

  • Any taxpayer, whose annual aggregate turnover exceeds the limit of INR 5 Crore, has to mandatorily mention the HSN code on all his tax invoices.
  • The financial year to be considered for calculating the aggregate turnover will be 2020-21.
  • For this group of taxpayers, it will now be mandatory to mention 6 digits of the HSN code for Goods as well as Services.

2

Taxpayers with aggregate turnover up to INR 5 Crore

  • The taxpayers, whose aggregate turnover falls below the INR 5 Crore slab, also have to mention the code in all their tax invoices.
  • This class of taxpayers has to mandatorily mention the 4-digit HSN code on all of their B2B invoices for all the Goods and Services consumed or provided.
  • However, it is optional to mention the 4-digit code on the B2C invoices for these taxpayers.

For both these groups of taxpayers, the financial year to be considered for calculating the annual aggregate turnover will be 2020-2021.

This change will come into effect from the 1st of April 2021.

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Some Frequently Asked Questions about HSN code

Where can I find my code?

  • You can find your HSN Code on the Master Codes list on the NIC portal.
  • You can find the link, here.

Which type of invoices for entering the code?

  • For taxpayers above 5 Crore– B2B and B2C invoices. 
  • For taxpayers below 5 Crore– B2B invoices.

What is the benefit of providing code?

  • HSN codes are an internationally recognized system of codifying and classifying the products in the World. 
  • This will make GST compliant with the international standards and ensure a fair levy of taxes.

How can GSTHero Help in e-Invoicing?

HSN Code is responsible for the proper categorization of goods and hence, you must input the appropriate code HSN.

In case you input an invalid code, your generated e-Invoice will also be incorrect which in turn will make your tax amount incorrect.

To avoid all these risks, accurate validations and automated e-Invoice generation are advisable.

We at GSTHero, provide a completely automated solution for all your e-invoicing needs.

So that you have no worries about the validation checks and errors because GSTHero got you covered.

Some prominent features of GSTHero’s e-Invoicing Solution include:

  • Generation of e-Invoices in bulk
  • Fully automated process
  • On-call expert support
  • Quicker Implementation
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For a live demo, you can reach out to:

Contact us at info@gsthero.com

Call us at: +91 800 7700 800

For more such informative content stay tuned to GSTHero.

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Gaurav Yadav

About the author

Gaurav is an Engineer by training with a deep interest in Economics & Finance. He has been associated with the Fin-Tech industry for quite some time now. He writes for GSTHero for topics including GST Compliance, GST Structure, etc & aims to break down complicated technical jargon into simple terms for the taxpayers.

His expertise includes GST Laws, Corporate Finance & Macro-Economics.

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