What is HSN Code?
HSN (“Harmonized System of Nomenclature”) a 6 digit uniform code that was developed by the World Customs Organization (WCO) which was introduced to classify 5000+ products. The HSN Code came into effect from the year 1988 and is accepted worldwide. The HSN has been introduced so that systematic classification of goods around the world can be possible.
HSN Code (Harmonized System of Nomenclature): Amendment
CBIC Notification No. 78/2020 (15.10.2020): w.e.f 01.04.2021, It would be mandatory to declare the HSN Code on the TAX Invoices of Goods and Services irrespective of the Turnover.
HSN Code would depend upon the turnover of the preceding Financial Year as follows:
The Taxpayers whose aggregate Turnover is up to Rs. 5 crores in the preceding Financial Year HSN code of 4 digits is mandatory for all the B2B tax invoices and optional for B2C tax invoices on the supplies of Goods and Services.
The Taxpayers whose aggregate Turnover is more than Rs. 5 crores in the preceding Financial Year HSN code of 6 digits is mandatory for both B2B and B2C tax invoices on the supplies of Goods and Services.
Penalty for not mentioning HSN Code
In case of non-mentioning or mentioning wrong HSN code under the Goods and Service Tax Act, the penalty of Rs 50,000/- ( INR 25000/- for CGST and SGST each) shall be levied.