With effect from the 1st April, 2021, it has been made mandatory for a GST taxpayer, having turnover of more than Rs 5 crore in the preceding financial year, to furnish 6 digits HSN Code (Harmonised System of Nomenclature Code), or as the case may be, SAC (Service Accounting Code) on the invoices issued for supplies of taxable goods and services.
A taxpayer having turnover of upto Rs 5 crore in the preceding financial year is required to mandatorily furnish 4 digits HSN code on B2B invoices. Earlier, the requirement was 4 digits and 2 digits respectively. For more details, Notification No. 78/2020-Central Tax, dated 15.10.2020 may be referred to.
Accordingly, with effect from the 1st April, 2021, GST taxpayers will have to furnish HSN/SAC in their invoices, as per the revised requirement.
It is pertinent to mention here the above changes in the mentioning of HSN/ SAC code, which would also require to be disclosed in Table 12 of Form GSTR-1 (i.e., details of outward supplies of goods or services) and therefore, corresponding changes have been made in the same.
Further, it is of critical importance to disclose the correct HSN/ SAC Code on the tax invoices and Form GSTR-1 as a general penalty of Rs 50,000/- (Rs 25,000/- each for CGST and SGST) can be levied for non-mentioning or mentioning wrong HSN/ SAC Code, under Section 125 of the CGST Act, 2017.
SAC wise classification of Services
The Scheme of Classification of Services adopted for the purposes of GST is a modified version of the United Nations Central Product Classification. The Explanatory notes has been mandated for the said Scheme of Classification of Services is based on the explanatory notes to the UNCPC, and as recommended by the committee constituted for the purpose.
The explanatory notes indicate the scope and coverage of the heading, groups and service codes of the Scheme of Classification of Services. These may be used by the assessee and the tax administration as a guiding tool for classification of services. However, it may be noted that where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description.
The Explanatory Notes along with the SAC wise list of classification of Services is given below for ready reference of our readers:
READ / DOWNLOAD EXPLANATORY NOTES FOR CLASSIFICATION OF SERVICES:
READ / DOWNLOAD SAC WISE CLASSIFICATION OF SERVICES:
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
