Number of digits of HSN to be mentioned on Invoice

[Ganeshan Kalyani]

Rule 46 of CGST Rules, 2017 provides for the particulars that should be there on the face of the tax invoice. The tax invoice, inter-alia, should contain Harmonised System of Nomenclature (HSN) code for goods or services supplied through that invoice.

In this regard, CBIC had published Notification No. 12/2017 – Central Tax dated 28.06.2017. The date of effect of the notification was 01.07.2017. As per the notification, the tax payer whose annual turnover in the preceding financial year was upto rupees one crore fifty lakhs then there was no requirement to mention HSN on the invoice. And if the annual turnover in the preceding financial year was more than rupees one crore fifty lakhs and upto rupees five crores then HSN at two digits level was required to be mentioned on the invoice. And, if the aggregate turnover in the preceding financial year was more than rupees five crores then HSN at four digits level was required to be maintained on the invoice. For ease of reference the table from the said notification is given below:

Serial Number	Annual Turnover in the preceding Financial Year	Number of Digits of HSN Code
(1)	(2)	(3)
1.	Upto rupees one crore fifty lakhs	NIL
2.	more than rupees one crore fifty lakhs and upto rupees five crores	2
3.	more than rupees five crores	4

After three years from the date of implementation of GST, CBIC has now in the month of October, 2020 has brought amendment in the principal notification no.12/2017-CT vide Notification No. 78/2020-Central Tax dated 15.10.2020. The date of effect of this notification is 01.04.2021.

As per the Notification the tax payer whose aggregate turnover in the preceding financial year was up to five crores then HSN at 4 digits level is required to be mentioned on the invoice. And, if the supply is to and unregistered person then there is no requirement for mentioning HSN on the invoice. Further, if the tax payer whose aggregate turnover in the preceding financial year was more than five crores then HSN at 6 digits level is required to be mentioned on the invoice. For ease of reference the table from the said notification is given below:

Serial Number (1)	Aggregate Turnover in the preceding Financial Year (2)	Number of Digits of Harmonised System of Nomenclature Code (HSN Code) (3)
1.	Up to rupees five crores	4
2.	more than rupees five crores	6

CBIC has issued the aforementioned notification much earlier giving enough time to the tax payer to determine the HSN at required digits for their goods or services.  

The tax payers who were not required to mention HSN on invoice is tnow required to determine HSN for their goods and services as per following notifications.

• Notification no.1/2017-Central Tax (Rate) dated 28.06.2017 as amended from time to time which provides HSN-wise CGST rate for taxable goods.
• Notification no.2/2017-Central Tax (Rate) dated 28.06.2017 as amended from time to time which provides HSN for exempted goods.
• Notification no.11/2017-Central Tax (Rate) dated 28.06.2017 as amended from time to time which provides HSN-wise CGST rate for taxable services.
• Notification no.12/2017-Central Tax (Rate) dated 28.06.2017 as amended from time to time which provides HSN-wise CGST rate for exempted services.

Now, recently CBIC has amended the notification no.12/2017-CT dated 28.06.2017 for the second time vide Notification no.90/2020-Central Tax dated 01.12.2020. As per the notification the tax payer is required to mention HSN at eight digits level on the invoice if he is into the supply of the goods that are enumerated in the said notification. The goods that are enumerated in the notification are chemicals. The notification is effective from 01.12.2020.

Summary

Tax payer should refer Notification no.90/2020-CT dated 01.12.2020 and thorough go through the list of chemicals mentioned therein and if yes then start mentioning eight digits HSN on the invoice. Further, the tax payer though have enough time for 01.04.2021 they may initiate to determine the HSN for their goods or services at 4 digits or 6 digits level. The advantage to begin the task of HSN classification right now is that if any of their products is classifiable under two different HSN then they can approach experts and get their opinion to adopt correct HSN.

Discussions to this article

[KASTURI SETHI]

Sh.Kalyani Ji,

Very useful article. I have saved this article on desktop of my laptop as ready reference for future. Thank you very much for taking so much pains in public interest.

[Ganeshan Kalyani]

Thanks you so much Sri Kasturi Sir for appreciation.