HSN Code Errors Faced by the Taxpayers and Solution

According to Notification No. 78/2020 – Central Tax Dated: 15.10.2020 taxpayers need to declare HSN code on tax invoice w.e.f. 01.04.2021 according to the below provisions: 

If the previous financial year’s aggregated turnover was up to INR 5 crores, the taxpayer needs to mention 4-digit HSN Code. Whereas, if the previous financial year’s aggregated turnover was more than INR 5 crores, the taxpayer needs to mention 6-digit HSN Code.

HSN Errors Faced by the Taxpayers 

A few taxpayers have complained that the HSN they use for GSTR-1 filing is not available in the Table 12 HSN drop-down. They further said that they are having difficulties entering the essential HSN information in Table 12 and filing Form GSTR-1, Statement of Outward Supplies, for July 2021. Furthermore, the HSN field is blank in some JSON files generated by the offline tool, along with other issues as listed below: – 

1. Error in processing, 
2. In progress or received but not yet processed 
3. Duplicate invoice number in the payload 

HSN Code Errors Solution 

1. Taxpayers should check their HSN code using the GSTN’s Search HSN facility on the GST portal, as well as the HSN code directory available in Excel format at the following link:   
2. Few taxpayers have been spotted attempting to report truncated first 6-digits from an otherwise legitimate 8-digit HSN. These shortened HSN codes are not available in the GST Tariff at the 6-digit level, and there is no corresponding goods description. As a result, these 6-digit HSNs are invalid. Taxpayers are urged not to truncate or remove the final two digits (including “00”) of a legal 8-digit HSN code to create a 6-digit HSN code. However, there are currently no validations in the system. 
3. Due to the pandemic scenario in the country, the GSTN has loosened these validations in GSTR-1, and if taxpayers do not locate a legitimate HSN code from the search drop-down, the system is currently accepting user entries, and they can update the HSN and description in the system and file the GSTR-1. 
4. These validations are not relaxed on the IRP portal for reporting e-invoices or the e-way bill portal for issuing e-way bills. 
5. It should be noted that certain taxpayers are receiving rejections when filling out the data in Table 12 of GSTR-1 on the GST portal, where the taxpayers are attempting to proceed just after entering the HSN code and no additional information. It should be noted that if no data is entered in the “Description” text box or any other field, the other fields will be disabled. After that, all necessary fields must be filled out before the data can be submitted. 
6. In a few situations, it has been discovered that taxpayers did not use the most recent version of the Offline Tool when uploading their GSTR-1 return to the GST portal using the Offline mode. In rare cases, the HSN Code and Tax Rate entries in Table 12 of GSTR-1 were left blank, resulting in the system failing to process the GSTR-1. Instead of using an older version of the Offline Tool, taxpayers are recommended to use the current version (version 3.0.4) available on the GST portal. If the taxpayer is utilizing a third-party GSTR-1 offline tool, the third-party offline tool’s service provider should be contacted and asked to update the tool. 
7. Certain taxpayers are obtaining rejections when filling out the data in Table 12 of GSTR-1 on the GST portal when they are attempting to proceed only after entering the HSN code and no other information. It’s worth noting that the other fields will be deactivated if no data is placed in the “Description” text box or any other field. Before the data can be submitted, all required fields must be filled out. 
8. Additionally, if the HSN of any Goods/Service is otherwise valid but is not accepted on the GST Portal, e-invoice Portal, or e-way Bill Portal, please raise a ticket to the GST Self-Service Portal:  gstsystem.in > https://selfservice.gstsystem.in/ Report a Problem > In the ‘Type of Issue/Concern’ search box, type ‘HSN’ > Choose an appropriate sub-category, such as ‘e-Invoice – IRP – HSN Code related.’