HSN Codes Mandatory From 1st April 2021

As per the mandate issued in the month of October 2020 by CBIC, businesses need to mandatorily mention the HSN code on the GST invoice from 1^st April 2021. However, certain guidelines were issued by the government at the time of releasing the mandate to compulsorily mention the HSN Code on invoices.

HSN Code Mandatory from 1^st April

A taxpayer needs to mandatorily mention the HSN codes based on their aggregate turnover. Let us understand the applicability of the same:

S.NO	Aggregate Turnover	HSN Code Digits
1	Up to INR 5 crores	4 digits
2	Exceeding INR 5 Crores	6 Digits

On Which Invoices HSN Code is Mandatory?

Now the question arises whether the HSN code is mandatory for every invoice, to know this you can refer to the below table:

S.NO.	Type of Supply	Turnover Exceeding INR 5 Crores	Turnover Not Exceeding INR 5 Crores
1	B2B	Mandatory	Mandatory
2	B2C	Mandatory	Optional

HSN Code in GSTR-1

From 1^st April 2021, it is mandatory to mention the HSN code summary along with the HSN code in table 12 of GSTR-1 based on the aggregate turnover.

If you are a monthly GST return filer, you need to mention the HSN code summary and HSN code in the next month’s GSTR-1. For example, GSTR-1 of Dec month needs to be furnished in Jan 2022. However, if you are a quarterly GST filer you need to mandatory furnish the HSN code summary at the end of the quarter. For instance, if you are filing GSTR-1 for Oct-Dec 2021 needs to be filed in July 2022.

Compliance Requirement for Businesses from 1^st April 2021

1^st April 2021 is the date from which the taxpayer is mandatory to mention the HSN wise summary of goods or/and summary. Here is a portion of the key things that will help you meet this compliance prerequisite.

1. List down different goods or/and services you supply because they may be various, they might fall under a similar HSN code.
2. You need to search for the exact last 2 digits of the HSN code if you are a business that needs to mention 6 digits HSN code on invoices.
3. Make the changes in the ERP or accounting as per the mandate. You need to do this before 1^st April to avoid a last-minute rush and stay compliant with the new prerequisite.