From April 1, companies with a turnover of more than Rs 5 crore will be expected to have a six-digit HSN or tariff code on invoices issued for taxable goods and services, according to the Finance Ministry. On B2B invoices, those with a turnover of up to Rs 5 crore in the previous financial year will be needed to have a four-digit HSN code. Previously, four-digit and two-digit numbers were needed. GST taxpayers will have to provide HSN (Harmonised System of Nomenclature Code) or Service Accounting Code (SAC) in their invoices as of April 1, 2021, according to the revised provision, the Ministry said in a statement.
Every product is assigned an HSN code in the business world (Harmonised System of Nomenclature). It aids in the classification of products in a systematic manner all over the world. HSN codes for products with six digits are commonly used. As a result, HSN codes used in Customs and GST are the same. As a result, the codes specified in the Customs tariff are also used for GST purposes. HSN Codes are widely used by producers and importers/exporters, according to the Ministry. Well before the GST, manufacturers were providing these codes. These codes have been provided by importers and exporters in import/export documents. Traders are more likely to use HSN codes found on invoices provided by manufacturers or importer suppliers.
“A significant number of GST taxpayers are already providing HS codes/SAC at 6/8 digits on invoices, e-way bills, and GSTR 1 returns on a voluntary basis,” it said.
With effect from April 1, traders, suppliers, and service providers, according to AMRG & Associates Senior Partner Rajat Mohan, will be required to provide more precise HSN codes when issuing invoices to supplies. “Deeper data analytics for every item supplied would assist tax officers in arresting tax evasion stemming from false invoices and irregular tax credit claims,” Mohan added.