Declaration of HSN code for goods & SAC codes for services

Declaratioan of HSN code for goods & SAC codes for services
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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 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 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 the B2B tax invoices but the same is optional for B2C invoices

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What will change for the taxpayer in terms of declaring HSN/SAC codes with the implementation of the above notification (w.e.f. 1st April 2021)? Declaration of HSN code for goods & SAC codes for services

Taxpayers whose annual aggregate turnover 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 annual aggregate turnover 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 annual aggregate turnover 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 with the provisions of the GST Act. As the penalty is not separately provided, a general penalty up to Rs 25,000/- can be levied upon the taxpayer.

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About CA Ankita Khetan 166 Articles
Ankita is a Chartered Accountant in practice and holds a Diploma in IFRS (from ACCA, UK). She is also a Commerce PG and Certified Independent Director (from IICA). She holds a certification in Forex and Treasury Management. Her area of expertise is GST and Income tax. She is passionate about reading, writing, and sharing knowledge on areas related to finance and taxation.

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