Understanding HSN Code Requirements in GSTR-1 and GSTR-1A Reporting
The government issued Notification No. 78/2020 – Central Tax on 15th October 2020, making it mandatory for taxpayers to report a minimum of 4 digits or 6 digits of the HSN Code in Table-12 of GSTR-1 based on their Aggregate Annual Turnover (AATO) in the preceding financial year. This requirement has been implemented in phases on the GST portal.
HSN Code Requirements Based on AATO
1 For Turnover up to ₹5 Crores:
- Mandatory to report 4-digit HSN Code in GSTR-1 for B2B supplies.
2 For Turnover exceeding ₹5 Crores:
- Mandatory to report 6-digit HSN Code in GSTR-1 for both B2B and B2C supplies.
3 Export of Goods/Services (irrespective of turnover):
- Mandatory to report 8-digit HSN Code.
Phase-wise Implementation
- Phase 1: Introduced the requirement gradually to familiarize taxpayers.
- Phase 2: Fully implemented from 1st November 2022, making compliance mandatory on the GST portal.
Example to Illustrate
Scenario 1: Turnover ≤ ₹5 Crores
- Business: A small manufacturing unit with AATO of ₹4 Crores in FY 2021-22.
- Requirement: Must report 4-digit HSN Code for B2B transactions in GSTR-1.
- Product: Selling Steel Rods.
- HSN Code: 7214 (4-digit).
GSTR-1 Reporting:
| INVOICE NO | Product Description | HSN Code | Quantity | Taxable Value | GST Rate | Total Tax |
| 001 | Steel Rods | 7214 | 100KG | 50,000 | 18% | 9,000 |
Scenario 2: Turnover > ₹5 Crores
- Business: A large trading company with AATO of ₹8 Crores in FY 2021-22.
- Requirement: Must report 6-digit HSN Code for B2B and B2C transactions in GSTR-1.
- Product: Selling Electric Motors.
- HSN Code: 850110 (6-digit).
GSTR-1 Reporting:
| INVOICE NO | Product Description | HSN Code | Quantity | Taxable Value | GST Rate | Total Tax |
| 101 | Electric Motors | 850110 | 10 units | 50,000 | 12% | 6,000 |
Key Points to Note
1 Table-12 of GSTR-1:
The HSN summary must be accurately reported as per the prescribed digits.
2 Error Prevention:
The GST portal validates HSN codes; incorrect entries may lead to filing errors.
3 Exports:
Exporters must always report 8-digit HSN Codes, ensuring alignment with customs documentation.
This phased approach ensures smooth compliance while enabling the GST system to align with global practices and improve tax
governance.
Also Read: – 6-Simple Steps to Apply GST Number
Explanation of Phase-3 Implementation of HSN Codes in Table 12 of GSTR-1 & 1A
What is happening in Phase-3?
The Phase-3 of HSN code reporting is a continuation of the government’s efforts to improve the transparency and standardization of GST returns. Starting from the January 2025 return period, taxpayers are required to report HSN (Harmonized System of Nomenclature) codes in Table 12 of GSTR-1 and GSTR-1A with stricter compliance norms.
This phase introduces more detailed reporting requirements, based on the annual aggregate turnover (AATO) of taxpayers, ensuring better tracking of goods and services across supply chains.
Key Changes in Phase-3
| Annual Aggregate Turnover (AATO) | HSN Code Digits Required | Details |
| Up to ₹5 crores | 4 digits | Mandatory reporting of 4-digit HSN codes. |
| Above ₹5 crores | 6 digits | Mandatory reporting of 6-digit HSN codes. |
| For export supplies | 8 digits | Mandatory reporting of 8-digit HSN codes for export supplies. |
Example of Phase-3 Reporting
Scenario 1: A taxpayer with AATO of ₹3 crores
- Before Phase-3: The taxpayer could report invoices without detailed HSN codes or with 2-digit HSN codes.
- After Phase-3 (From January 2025): The taxpayer must report 4-digit HSN codes for all outward supplies in Table 12 of GSTR-1
Example:
Supply of “Biscuits”:
- HSN Code: 1905 (4 digits)
- Taxpayer reports in GSTR-1 as:
- Description: Biscuits
- HSN Code: 1905
- Taxable Value: ₹1,00,000
- GST Rate: 18%
Scenario 2: A taxpayer with AATO of ₹8 crores
- Before Phase-3: The taxpayer could report 4-digit HSN codes or provide lesser details in some cases.
- After Phase-3 (From January 2025): The taxpayer must report 6-digit HSN codes.
Example:
Supply of “Paracetamol tablets”:
- HSN Code: 300490 (6 digits)
- Taxpayer reports in GSTR-1 as:
- Description: Paracetamol tablets
- HSN Code: 300490
- Taxable Value: ₹50,000
- GST Rate: 12%
Scenario 3: Export Supply
- Requirement: Mandatory 8-digit HSN code for export supplies.
Example:
Export of “Raw Silk Yarn”:
- HSN Code: 50020010 (8 digits)
- Taxpayer reports in GSTR-1 as:
- Description: Raw Silk Yarn
- HSN Code: 50020010
- Taxable Value: ₹5,00,000
- GST Rate: 0% (Exports are zero-rated)
Benefits of Phase-3 Reporting
1 Standardization: Ensures uniformity in reporting of goods and services across taxpayers.
2 Transparency: Helps track goods and services better throughout the supply chain.
3 Compliance: Simplifies audit processes for the GST department and reduces classification disputes.
By adhering to these updated requirements, taxpayers will contribute to a more efficient GST system while avoiding penalties for non-compliance.
Table-12 of GSTR-1/1A pertains to the HSN Summary of Outward Supplies, where taxpayers report the HSN codes, descriptions, quantities, and values of goods/services supplied. Enhancements in this table generally aim to improve accuracy, compliance, and ease of data entry.
Potential Enhancements in Table-12 and Explanation with Example
1. Inclusion of Unit of Measurement (UoM)
- Earlier: Only quantity was reported without specifying the unit.
- Enhancement: Mandatory inclusion of the unit (e.g., kg, liter, pcs) along with the quantity.
Example
Before Enhancement:
- HSN: 1001, Description: Wheat, Quantity: 100, Value: ₹50,000
After Enhancement:
- HSN: 1001, Description: Wheat, Quantity: 100, UoM: kg, Value: ₹50,000
2. Separate Columns for CGST, SGST, and IGST
- Earlier: Only the total tax value was reported.
- Enhancement: Segregation into CGST, SGST, and IGST components for better clarity.
Example
Before Enhancement:
- HSN: 1001, Tax: ₹9,000
After Enhancement:
- HSN: 1001, CGST: ₹4,500, SGST: ₹4,500, IGST: ₹0
3. Validation for HSN Code Accuracy
- Earlier: Typographical errors in HSN codes were not flagged.
- Enhancement: System validates the entered HSN code with the GST database.
Example
- If a taxpayer enters an invalid HSN like “12345,” the system will alert them and suggest correction.
4. Dynamic Linking of Tax Rates
- Earlier: Taxpayers manually entered tax rates.
- Enhancement: Automatic pre-filling of tax rates based on the HSN code entered.
Example
- If HSN 1001 is entered, the system autofills the GST rate (e.g., 5%) to avoid errors.
5. Optional vs. Mandatory Fields
- Earlier: Certain fields like quantity were optional for service providers.
- Enhancement: Clear distinction between mandatory and optional fields based on the nature of the business.
Example:
- Service providers need not fill quantity or UoM but must provide descriptions and values.
6. Integration with e-Invoicing Data
- Earlier: Manual entry of HSN details even if e-invoice data was available.
- Enhancement: Automatic fetching of HSN details from e-invoice data, reducing redundancy.
Example
- If an e-invoice contains HSN 1001, Table-12 will auto-populate the same.
Overall Impact
- Enhanced reporting accuracy.
- Reduced manual effort and errors.
- Streamlined compliance process.
