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GST Return Update: What are new HSN/SAC Code Reporting Guidelines

28 May 2025Saloni Kumari
GST Return Update: What are new HSN/SAC Code Reporting Guidelines

GST Return Update: What are new HSN/SAC Code Reporting Guidelines

Under the Goods and Services Tax (GST) regime in India, the declaration of HSN (Harmonized System of Nomenclature) codes in invoices is an important compliance requirement that varies depending on the type of sale, B2B (Business to Business) or B2C (Business to Consumer)โ€”and the annual turnover of the taxpayer. The HSN code assists in classifying goods and services for accurate taxation and reporting.

For B2B sales, the use of HSN codes is mandatory across all types of goods, whether they are taxable, exempt, or nil-rated. If a business has an annual turnover of up to Rs. 5 crores, it is required to mention at least a 4-digit HSN code on invoices issued to other businesses. But, if the turnover increases more than Rs. 5 crores, the requirement becomes stricter, ordering a 6-digit HSN code. This rule ensures greater specificity and standardisation in business transactions and assists with cross-verification by the tax authorities.

In contrast, for B2C sales, the compliance requirements are more relaxed for businesses with a lower turnover. If the turnover is up to Rs. 5 crores, mentioning a 4-digit HSN code is optional, regardless of whether the goods are taxable, exempt, or nil-rated. This provides some operational ease for smaller businesses that sell directly to consumers. However, once the turnover crosses Rs. 5 crores, the regulations coordinate with those of B2B transactions, and it becomes mandatory to mention a 6-digit HSN code in all B2C invoices.

New Update: GSTN Birfucates GSTR-1/1A Table 12 in 2 sections for B2B and B2C Transactions

B2B sales:

Nature Turnover upto Rs. 5 crores Turnover exceeds Rs. 5 crores
Taxable sales 4 digits of HSN are mandatory 6 digits of HSN are mandatory
Exempt sales 4 digits of HSN are mandatory 6 digits of HSN are mandatory
Nil-rated sales 4 digits of HSN are mandatory 6 digits of HSN are mandatory

B2C sales:

Nature Turnover upto Rs. 5 crores Turnover exceeds Rs. 5 crores
Taxable sales 4 digits of HSN are optional 6 digits of HSN are mandatory
Exempt sales 4 digits of HSN are optional 6 digits of HSN are mandatory
Nil-rated sales 4 digits of HSN are optional 6 digits of HSN are mandatory

Please note:

  • We will check the Aggregate Turnover PAN-wise instead of GSTIN-wise.
  • HSN code of 8 digits is mandatory for export sales.
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