Last updated on December 14th, 2022 at 01:16 pm
Declaration of HSN code for goods & SAC codes for services
The decision to mandatory declare the HSN code for goods and the SAC code for services was taken in the 42nd GST Council Meeting held on 5th October 2020.
A CGST Notification no. 78 was issued on 15th October 2020 for the same.
No. of digits of HSN or SAC depends upon the AATO of the previous financial year
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| Taxpayer | HSN Requirement |
| If annual aggregate turnover is above Rs. 5 crores during the preceding financial year | HSN code of 6 digits is mandatory for all the tax invoices |
| If your annual aggregate turnover is up to Rs. 5 crores during the preceding financial year | HSN code of 4 digits is mandatory for all B2B tax invoices but the same is optional for B2C invoices |
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How reporting/declaring of HSN/SAC code has changed w.e.f. 1st April 2021?
⊗ Taxpayers whose AATO in the previous financial year was up to Rs. 1.5 Crores were NOT mandatory to declare HSN for goods & SAC for services up to 31st March 2021. But from 1st April 2021, it will be mandatory to declare a 4-digit HSN code for goods & SAC code for services for B2B supplies. (optional for B2C supplies)
⊗ Taxpayers whose AATO in the previous financial year was above Rs 1.5 Crores and up to Rs. 5 Crores were required to declare only a 2-digit HSN for goods & SAC for services up to 31st March 2021. But from 1st April 2021, it will be mandatory to declare a 4-digit HSN code for goods & SAC code for services for B2B supplies. (optional for B2C supplies)
⊗ Taxpayers whose AATO in the previous financial year was above Rs. 5 Crores were required to declare a 4-digit HSN for goods & SAC for services up to 31st March 2021. But from 1st April 2021, it will be mandatory to declare a 6-digit HSN code for goods & SAC code for services for B2B as well as B2C supplies.
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| Type of taxpayer | Up to 31st March 2021 | From 1st April 2021 |
| Taxpayers whose AATO was up to Rs. 1.5 Crores | Not mandatory | 4-digit HSN or SAC |
| Taxpayers whose AATO was above Rs. 1.5 Crores and up to Rs. 5 Crores | 2-digit HSN or SAC | 4-digit HSN or SAC |
| Taxpayers whose AATO was above Rs. 5 Crores | 4-digit HSN or SAC | 6-digit HSN or SAC |
| In the case of exports & imports irrespective of turnover | 8-digit HSN or SAC | 8-digit HSN or SAC |
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What is the penalty if a taxpayer doesn’t declare HSN/SAC codes as required?
General penalty u/s 125 can be invoked as the taxpayer has contravened the provisions of the GST Act. As the penalty is not separately provided, a general penalty of up to Rs 25,000/- can be levied upon the taxpayer.
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