Advisory on HSN Validations in Table 12 of GSTR-1

The Goods and Services Tax (GST) framework has introduced several enhancements to the reporting of Harmonized System of Nomenclature (HSN) codes in Table 12 of GSTR-1/1A. These changes aim to streamline compliance and improve the accuracy of tax reporting, with phased implementation starting from November 2022. Below is a detailed overview of the advisory on HSN validations.

Mandatory Reporting of HSN Codes

The mandatory reporting of HSN codes in Table 12 of GSTR-1 is based on the taxpayer’s Aggregate Annual Turnover (AATO) in the preceding financial year. This requirement was introduced through Notification No. 78/2020 – Central Tax, dated 15th October 2020, and is being implemented in phases.

Phase-Wise Implementation

1. Phase 2 (Effective from 1st November 2022)
   • Taxpayers with AATO up to ₹5 crore
     • Mandatory reporting of 4-digit HSN codes for goods and services.
     • Manual entry of HSN codes allowed, with warnings or alerts in case of errors.
     • Filing permitted even after manual HSN code entry.
   • Taxpayers with AATO exceeding ₹5 crore
     • Mandatory reporting of 6-digit HSN codes.
     • Manual entry allowed with alerts for incorrect HSN codes.
2. Phase 3 (Effective from January 2025 return period)
   • Taxpayers with AATO up to ₹5 crore
     • Mandatory reporting of 4-digit HSN codes using a drop-down selection only.
   • Taxpayers with AATO exceeding ₹5 crore
     • Mandatory reporting of 6-digit HSN codes, with the following additional validations:
       • Manual HSN entry not allowed.
       • HSN codes must be selected from a predefined drop-down list.
       • Descriptions auto-populated based on the HSN master data.
   • Value Validations in Table 12
     • Validation of B2B supply values across tables like 4A, 4B, 6B, 6C, and others with the corresponding entries in Table 12.
     • Validation of B2C supply values in tables like 5A, 6A, 7A, 7B, and others against Table 12 entries.
     • In amendment cases, only the differential value is considered for validation.
     • Initially, these validations are in warning mode, allowing filing despite mismatches.
3. Phase 4
   • Details will be communicated in due course.

Additional Enhancements in Table 12 of GSTR-1/1A

To further ease compliance, the following features have been introduced:

1. Bifurcation of Table 12
   • The table is now divided into two tabs:
     • B2B Supplies
     • B2C Supplies
   • Taxpayers must separately enter the HSN summary for each category.
2. Downloadable HSN Code List
   • A new button, “Download HSN Codes List”, enables taxpayers to download an Excel file containing the updated HSN and SAC codes with descriptions.
3. Searchable Product Descriptions
   • The button for “Product Name as in My Master” now allows searching descriptions provided in the taxpayer’s HSN master. Upon selection, the HSN code, description, UQC, and quantity auto-populate.

Key Notes for Taxpayers

• The enhancements aim to ensure consistent and error-free reporting of HSN codes.
• While initial validations are in warning mode, taxpayers are advised to address discrepancies to avoid potential issues in the future.
• Regular updates and improvements are expected to simplify the filing process further.

For more details or assistance, taxpayers can refer to the GST portal or consult their tax advisors.