HSN Code Requirements Based on Annual Turnover

HSN Code Requirements Based on Annual Turnover

Below Summary table showing the requirement of HSN code reporting under GST based on a taxpayer’s annual turnover

 

• Phase-3 of HSN Code reporting in Table 12 of GSTR-1/1A begins May 2025, based on AATO (4/6 digits mandatory). Table 13 (document-wise details) is also now mandatory from the same period. These changes are part of the ongoing phased implementation for better compliance and data accuracy.
• These rules apply to GSTR-1 filing and invoice issuance. Even if optional for smaller taxpayers, reporting HSN codes can reduce mismatches and aid buyers in ITC claims. For export/import transactions, 8-digit HSN is required to align with customs classification.
• GST taxpayers must ensure correct classification of services & goods and applicable GST tax rates.

GSTR-1 Table 12: Bifurcation & Validation Rules (Effective May 2025)

Clarification on Table 12 (HSN) of GSTR-1

• Official clarification by GST Tech regarding Table 12 (HSN Summary) of GSTR-1, specifically addressing issues faced by taxpayers with only B2C supplies. GSTN clarified that Table 12B (B2C HSN Summary) is not mandatory. It can be left blank or filled with any value.
• Issue Identified: GST Taxpayers with only B2C sales face system issues if Table 12A (B2B HSN Summary) is left blank. This happens when there is an entry in Table 8 (i.e., the system expects something in 12A if Table 8 has data).
• Temporary Solution: If you have no B2B supplies: GST taxpayers still need to enter at least one row in Table 12A. For that Use any HSN code and any UQC required Fill all other values (e.g., quantity, taxable value, tax amount) as “0”. This prevents errors and allows submission to proceed.

GSTR-1 Table 12 bifurcation and validations, as per the CBIC clarification and GSTN advisory dated May 1, 2025

Key Update: Bifurcation of Table 12

• Table 12 of GSTR-1/1A is now split into two distinct tabs B2B Supplies and B2C Supplies.
• New Validations Introduced : The system will match HSN-wise values reported in Table 12 with other tables in the return to Ensure data consistency. and Prevent under-reporting/misreporting

HSN Summary Reporting Rules Post-Bifurcation

• B2B Supplies (Table 12A) – Mandatory : HSN summary is mandatory. Taxpayer Ensure correct HSN code, unit of quantity (UQC), and value is reported for every B2B supply. System validations are in place to cross-check with other tables.
• B2C Supplies (Table 12B) – Optional for Small Businesses : HSN summary is optional for taxpayers with aggregate turnover up to INR 5 crore in the previous financial year. Based on Notification No. 12/2017-Central Tax (as amended), GST taxpayer can enter any value or leave Table 12B blank. The system will not throw an error.
• Rationale Behind B2C Flexibility : As HSN reporting for B2C is not mandatory for smaller taxpayers, the system does not enforce Table 12B. This aligns with practical challenges and simplifies compliance.

Key Takeaways for Taxpayers

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