The Goods and Service Tax (GST) helpdesk has received some tickets at helpdesk wherein it was reported that certain 6-digit HSN codes are not available in HSN Master/ not accepted on e-invoice/e-Way bill portals.

Reason behind this problem

There are instances that some taxpayers are trying to report truncated first 6-digits out of an otherwise valid 8-digit HSN; which are actually not available in Tariff at 6-digit level and with no corresponding description of goods; these are invalid and hence not being allowed in the System.

For Example, if the HSN Code is “0102 29 10”, then 6 digit HSN corresponding to 8 digit is available in Custom Tariff Act i.e. “0102 29”, therefore the same is also available on GST Portal / Eway Portal.

However, if the HSN is “0102 31 00”, in this example 6 digit HSN corresponding to 8 digit is not available in Custom Tariff Act i.e. “0102 31”. Taxpayers have derived it as a truncated 6 digit HSN out of an otherwise valid 8 digit HSN i.e. “0102 31 00”. Therefore this 6 digit HSN is not available on GST Portal / Eway Portal. In these cases full 8 digit HSN may be reported to remove the error.

Significant notifications

The Central Board of Indirect Taxes (CBIC) issued Notification No. 12/2017-Central Tax dated June 28, 2017, to show specified digits of Harmonised System of Nomenclature (HSN)/ Service Accounting Code (SAC) Code on raising of tax invoices for supply of goods or services.

It has been notified that if aggregate Turnover in the preceding Financial Year is upto INR 1.50 crore then the number of HSN Code will be Nil.

If aggregate Turnover in the preceding Financial Year is more than INR 1.50 crore and upto INR 5 crores then the number of HSN Code will be 2.

If aggregate Turnover in the preceding Financial Year is more than INR 5 crores then the number of HSN Code will be 4.

Subsequently, the above notification was amended vide Notification No. 78/2020 – Central Tax, dated October 15, 2020 to mandate 4/6- digit HSN/SAC Code on supply of goods or services on the tax invoices w.e.f. April 1, 2021.

It has been notified that if aggregate Turnover in the preceding Financial Year upto INR 5 crores then the number of HSN Code will be 4.

If aggregate Turnover in the preceding Financial Year is more than INR 5 crores then the number of HSN Code will be 6.

Instructions issued by GSTN

Taxpayers noted that based on the harmonious interpretation of the Notifications, as referred above, read with Customs Tariff Act, 1975, as made applicable to GST; the number of digits of HSN, as specified vide Notifications No. 12/2017 & 78/2020 (Central Tax), are the minimum number of digits of HSN to be mentioned on the invoice.

For Example, where HSN 6 digits are specified to be reported in invoice, valid HSN codes as available in tariff, at both 6-digits and 8-digits can be mentioned. Similarly, where HSN at 4-digits are specified, valid HSN codes as available in tariff, at 4-digit, 6-digit and 8-digit can be mentioned. However, the 4/6 Digit HSN Codes, which are not available in the tariff; along with specific description, Unit and GST Rate; are not allowed to be mentioned.

Further, if the HSN of any Goods/Service is otherwise valid but not accepted on GST Portal / e-invoice Portal / e-way Bill portal, please raise a ticket on GST Self-Service Portal: https://selfservice.gstsystem.in/ > Report Issue > Type ‘HSN’ in ‘Type of Issue/Concern’ search box > Select relevant sub-category, e.g. ‘e-Invoice – IRP – HSN Code related’