The Central Board of Indirect Taxes (CBIC) issued Notification No. 12/2017-Central Tax dated June 28, 2017to 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 as under:

S. No.Aggregate Turnover in the preceding Financial YearNumber of Digits of HSN Code
1.Upto INR 1.50 crore Nil
2.More than INR 1.50 crore and upto INR 5 crores 2
3.More than INR 5 crores 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:

S. No.Aggregate Turnover in the preceding Financial YearNumber of Digits of HSN Code
1.Upto INR 5 crores 4
2.More than INR 5 crores 6

Further, a proviso was inserted to provide that 4- digits of HSN Code is optional in respect of supplies made to unregistered persons i.e., B2C supplies for a registered person having aggregate turnover upto INR 5 crores in the previous financial year.

Thereafter, Notification No. 12/2017-Central Tax dated June 28, 2017 was again amended vide Notification No. 90/2020 – Central Tax, dated December 01, 2020 to provide for class of supply- ‘Chemicals’ whose HSN Code are required to be mentioned at 8-digit on the tax invoices.

Further, it is to be noted that the above changes of mentioning 4/6 Digit HSN/ SAC code, as applicable, are also required to be captured in Table 12 of Form GSTR-1 (i.e., details of outward supplies of goods or services) and therefore, corresponding changes are made in the same.

Furthermore, it is very important to mention the correct HSN/ SAC Code on the tax invoices and Form GSTR-1 as penalty of INR 50,000/- (INR 25,000/- each for CGST and SGST) can be levied for non-mentioning or mentioning wrong HSN/ SAC Code under Section 125 of the Central Goods and Services Tax Act, 2017 (i.e., General penalty).

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