HSN Code on E-invoices Mandatory for ₹ 5 Crore & More Turnover
The Goods and Services Tax Network has introduced mandatory rule for taxpayers with an aggregate annual turnover (AATO) of ₹ 5 crore and more in the preceding financial year. They have to now report minimum 6-digit Harmonized System of Nomenclature (HSN) Code on the e-invoices generated. The new update is made compulsory and will come in effect from 15th December 2023.
Source: https://einvoice1.gst.gov.in/
This announcement follows a previous update earlier in September, when the GSTN updated a notification according to which the e-way billing system now makes it mandatory for the businesses with an annual aggregate turnover of ₹ 5 crore and more to include 6-digit HSN code on both e-invoices and e-way bills. Accordingly, it becomes compulsory for the businesses with lesser turnover to mention at least 4 digits of HSN code on the e-invoices and e-way bills.
The HSN code, which stands for Harmonized System of Nomenclature, is an internationally accepted classification system for trading goods. Its inclusion on e-invoices is aimed at standardizing the reporting of goods and services, enabling better categorization, and ultimately facilitating smoother tax compliance.
This update comes forth at a time when we are witnessing increasing cases of tax evasion. Recently, in Rajya Sabha, it was declared that the GST evasion cases of ₹ 1.51 lakh crore have been detected across the country this financial year till October. We’ve seen commendable steps taken up by the government in order to curb the tax evasion in previous months and this mandate is another way to create a uniform and efficient taxation system, reducing complexities for businesses, and ensuring that the GST framework remains adaptive to the evolving needs.
The GSTN continues to strive towards fostering a business-friendly environment, and this latest update marks another step towards a more seamless and standardized GST regime.
