What HSN/SAC details to be declared in GST Returns, Invoices?

This document covers

1. What are HSN or SAC?
2. HSN/SAC Reporting requirement before 31st March 2021
3. HSN/SAC Reporting requirement after 01st April 2021
4. HSN/SAC Reporting requirement w.e.f Jan 2025
5. Reporting in GSTR-1
6. Penalty for Non-Compliance

1. What are HSN or SAC?

HSN or HS (Harmonized Commodity Description and Coding System) is a standardized system of nomenclature of different goods developed by World Customs Organization, which is accepted globally. HSN uses 6 digits uniform codes to classify different goods. India uses eight-digit codes for more specific and precise classification

1. HSN Code: HSN (Harmonised System of Nomenclature) is used for classifying the Goods under GST.
2. SAC Code: SAC (Services Accounting Code) is used for classifying the Services under GST.

Find HSN / SAC Codes along with the GST Rates to be used in Tax Invoices.

2. HSN/SAC Reporting requirement before 31st March 2021

Indication of HSN or SAC Code details in GST Returns (GSTR-1) and Invoices till 31st March 2021 are as follows

• CBIC has notified the minimum number of HSN/SAC code that the taxpayer needs to indicate in GST returns and Invoices through Notification No 12/2017 dated 28/06/2017.
• The Taxpayer needs to report the HSN/SAC code for each product or service they sell, depending on the turnover in the preceding financial year (eg. for FY 2020-21, FY 2019-20 turnover to be considered.)

3. HSN/SAC Reporting requirement after 01st April 2021

CBIC has amended the notification 12/2017 vide notification no 78/2020 to mandate disclosure of HSN/SAC codes in GST Returns (GSTR-1) and Tax Invoices from 01st April 2021 are as follows

4. HSN/SAC Reporting requirement w.e.f Jan 2025

GSTN is implementing the phase 3 reporting of HSN Codes in GSTR 1/GSTR 1A. This reporting requirement is effective from January 2025 February . Earlier it was supposed to be implemented from January 2025. The key features in phase 3 implementation of HSN Codes are as follows

• HSN/ SAC Code needs to be selected from the dropdown. Manual user entry of HSN/SAC will not be allowed.
• A customized description mentioned in HSN master will auto-populate in a new field called "Description as per HSN Code".
• HSN Code table ( table 12) in GSTR 1 / GSTR 1A will be bifurcated into 2 tabs i.e., B2B supplies and B2CS supplies. GST taxpayers are required to enter the HSN codes of B2B and B2CS supplies separately.
• GSTN will validate the total values of sales mentioned in B2B and B2CS with B2B, Exports, B2CS etc
   NOTE

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Initially these validations will be kept on warning mode. The taxpayer can proceed to file GSTR 1 even if there is mismatch

• GSTN is providing the HSN Codes list in excel in Table 12 of GSTR 1/1A

5. Reporting in GSTR-1

HSN/SAC codes are required to be entered in GSTR-1. Description of each item in the Invoices need not be uploaded in GSTR-1 but the HSN/SAC needs to be entered for each product and/or service.

Taxpayers who use EZTax.in Books software need to enter the HSN or SAC code in the Product Master, so that the HSN/SAC information would automatically brought in to the GSTR-1 Return based on the previous year turnover. Also refer How to create a GST ready Invoice

6. Penalty for Non-Compliance

• Every Taxpayer needs to report correct HSN/SAC Code on Tax Invoices and GSTR-1.
• Penalty of Rs 50000 ( Rs 25000 under CGST and Rs 25000 under SGST) would be levied for non-mentioning of HSN/SAC or wrong mentioning of HSN/SAC in GST Returns and Tax Invoices.