Compulsory mention of 4 digit HSN code on invoices upto turnover 5 crore

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 yearExtend of HSN Code
Upto INR 1.50 CroresNo HSN Code is mandatory
Turnover between INR 1.50 Crores and INR 5 CroresHSN Code upto 2 digits
Turnover exceeding INR 5 CroresHSN 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 YearNumber of Digits of HSN code
Up to rupees INR 5 crores4 digit HSN Code
more than INR 5 crores6 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.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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