HSN (Harmonised System of Nomenclature) codes are unique codes assigned to different classes of product and it helps in easy identification of products. It is acceptable worldwide in the course of business which facilitates international trade as well.
Till 31.03.2021, provisions related to mentioning HSN Code were lenient. However, The ministry of Finance (Department of Revenue) vide Notification 06/2020–Integrated Tax dated 15th October, 2020 has provisions related to mentioning HSN (Harmonised System of Nomenclature) code on invoices.
1. Existing Provisions for disclosure of HSN code on Tax invoices till 31st March 2021
Till 31st March, 2021, GST Law was not stringent related to mentioning HSN Code on tax invoices. Below are the requirements:
|Aggregate turnover during earlier year||Extend of HSN Code|
|Upto INR 1.50 Crores||No HSN Code is mandatory|
|Turnover between INR 1.50 Crores and INR 5 Crores||HSN Code upto 2 digits|
|Turnover exceeding INR 5 Crores||HSN Code upto 6 digits|
In case of export, HSN Code was required upto 8 digits irrespective of aggregate turnover during the preceding year.
2. Change in disclosure of HSN code on tax invoices from 01st April 2021
With an objective to check fraud under GST or practise of issuance of fake invoices under GST, i.e., issuances of invoices without movement of goods, CBIC amended provisions related to HSN Code vide Notification 06/2020–Integrated Tax dated 15th October, 2020.
As per amended provisions, following persons are required to mention HSN Code on invoice:
|Aggregate Turnover in the preceding Financial Year||Number of Digits of HSN code|
|Up to rupees INR 5 crores||4 digit HSN Code|
|more than INR 5 crores||6 Digit HSN Code|
However the only exception is made for the registered person having turnover less than 5 crores in the previous year and supply is made to an unregistered person. Amended provisions shall be implemented from 1st April 2021.
3. How to disclose 6 Digit HSN code, where 6 digits HSN Codes are not available on GST Portal
In this matter, CBIC clarified that List of HSN Codes is already given and 6 digit HSN Code shall be valid only if it is given in such list with a valid description.
Further, there are certain HSN Codes which are given with 4 digits or 8 Digits only and such HSN codes are not given at 6 digit level with a valid description. However, some taxpayers are trying to mention 6 digit HSN Code from an 8 digit List which is actually not available in List at 6 Digit Level with any valid corresponding description.
Such HSN Code shall be Invalid and the system will not allow the same.
E.g. Following HSN Codes are given in System:
|2910||Epoxides, epoxyalcohols, epoxyphenols and epoxyethers, with a three-membered ring, and their halogenated, sulphonated, nitrated or nitrosated derivatives|
|2910.40.00||Dieldrin (ISO, INN)|
In the given case, no HSN Code is provided at 6 digit level. Therefore, HSN Code 2910.40 shall not be a valid HSN Code.
Therefore, please note that the required 4/6 digits are the minimum number of digits to be mentioned in Invoice.
E.g., If HSN code is required to be mentioned at 6 digits then taxpayers can mention the same at 6 digits or 8 digits level as per valid HSN code given in List. Further, if HSN Code is required at 4 digit level then HSN Code can be mentioned at 4 digits or 6 digits or 8 digits as given in HSN Code List.