As per Indian government guidelines 6 Digit HSN Codes are mandatory for Stock Items from 1st April 2021 * HSN/SAC Code turnover Up to rupees five crores – put 4 digits of HSN code * HSN/SAC Code turnover more than rupees five crores- put 6 digits of HSN Code What is HSN code? HSN (Harmonised System of Nomenclature) is an internationally accepted product coding system. In India, HSN coding is currently used under Excise, Customs, and state Value Added Tax (VAT) laws and is now also proposed to be used under Goods and Services Tax (GST) law, for classification of products/goods. Codes under GST: Under GST law, the HSN code to be used by a taxpayer for classification of goods will be based on the taxpayer’s turnover. The HSN code needs to be declared on the tax invoice and also to be reported while filing the GST returns. The HSN codes for mandatory mapping/classification of goods that need to be used by a taxpayer are as follows; ~Taxpayers whose turnover is Rs. 5 crore and above shall use 6 digit HSN code, ~Taxpayers whose turnover below Rs. 5 crore shall use 4 digit HSN code, ~8-digit HSN code for export and import of goods Primary benefit of HSN codes: When goods and offerings are recognised via their specific HSN codes, which are globally acceptable, the identification of goods becomes easy, and resultantly possibilities of misinterpretation tend to reduce. While filing GST returns online, HSN code in respect of the supply of goods and Services Accounting Code in respect of the supply of services will have to be uploaded, and there will be no need for entering the description of the goods or services while filing GST returns.
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