HSN Codes Reporting In GSTR 9 Annual Return Filing

HSN or Harmonised System of Nomenclature is one of the most talked about terms in GST. People filing Goods and Service Tax return have a lot of ambiguity regarding HSN reporting due to number of reasons such as, newly introduced GST laws and provisions, multiple GSTRs to be filed, different disclosure requirements and so on..

Let us read below to get answers of all such day to day common queries and ensure seamless GSTR 9 Annual Return filing, now onward!

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What is HSN code in GST?

A unified system called HSN has been adopted for the classification of goods under.

HSN or Harmonised System of Nomenclature are standard codes, which are assigned for each possibly identified goods. They are used worldwide and India has adopted the system way back in 1986 for Central Excise and Customs Act. This help in standardising the classification of supply and determining tax rates not just in India rather worldwide.

Indian manufacturers under GST shall be required to follow a 3-tiered structure of Harmonised System of Nomenclature.

  • Those with a turnover of less than INR 1.5 Crores need not follow HSN
  • Taxpayers with a turnover exceeding INR 1.5 Crores but less than INR 5 Crores shall be using the 2 digit HSN codes
  • Those with a turnover exceeding INR 5 Crores shall be using the 4 digit HSN codes
  • Those dealers who are into imports or exports shall mandatorily follow the 8 digit HSN codes

Same as HSN for goods, India has a complete set of adopted SAC (Service accounting Code) for categorisation of services.

Where details of HSN summary is required to be submitted in annual return?

The details of HSN summary of both inward and outward supplies is required to be mandatorily submitted in table 17 and 18.

HSN were shown incorrectly on the outward supply though there was no impact on rate of tax. Is correct HSN required to be shown in the Annual Return?

Yes, Correct Harmonised System of Nomenclature should be shown in Annual Return. There could be possibility that HSN number was selected wrongly which is noticed after the end of FY. Though the HSN summary in GSTR-1 might have been given wrong, same mistake should not be continued in the Annual Return.

HSN wise details of input tax credits availed (for inputs, services and capital goods) is required to be given in GSTR 9?

HSN wise details of input tax credits availed for inputs, services and capital goods is required to be disclosed based upon these criterias

Annual Turnover of Taxpayer Requirement of HSN details
  • Upto Rs 1.50 Cr.
  • Optional
  • Rs 1.50 Cr upto Rs 5.00 Cr
  • Mention two digits
  • Above Rs 5.00 Cr
  • Mention four digits
  • Dealers of imports or exports
  • 8 digit HSN codes required

The Harmonised System of Nomenclature summary needs to be reported under Part V – Sl.No.18. of annual return

GSTR 9 requires disclosure of how many digits of HSN?

Part VI requires disclosure of Harmonised System of Nomenclature wise details of inward and outward supplies. It will be optional for taxpayers having annual turnover upto INR 1.50 Cr. It will be mandatory to report HSN code at two digits level for taxpayers having annual turnover in the preceding year above INR 1.50 Cr but upto INR 5.00 Cr and at four digits’ level for taxpayers having annual turnover above INR 5.00 Cr.

Is HSN summary also required for debit note and credit note transactions?

Yes, the Harmonised System of Nomenclature summary is required to be given if Debit or credit note are issues in relation to movement of goods. Movement of goods means when the direct impact can be seen on stocks and not just price adjustment. For example : A sales made at Rs 95, now debit note issued for Rs 5 to make the effective price Rs 100. Although the transaction involves issue of debit note, but the same will not be reported. Because it was issued just to give effect to the prices.

Similarly if a debit note is issued for making purchase returns the same shall be reported under Table of the Annual return. And, credit note issued on account of return of goods by the customer under Table 17.

Is it necessary that the value of HSN summary shall also include amount of exempt supply?

There is no explicit statement made in Annual Return as to only report taxable supplies. Not even in Table 17 which provides for reporting of outward supplies. Hence, it can be inferred that, Harmonised System of Nomenclature wise summary shall also be provided for exempt supplies.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.