HSN Code Reporting GST: Mandatory in GSTR-1 from January 2025
In this article "HSN Code Reporting GST: Mandatory in GSTR-1 from January 2025", we explain these important updates, supported by tables, relevant sections, rules, and a practical example.
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📜 Legal Background for Mandatory HSN Code Reporting
Key Notifications and Circulars
- Notification No. 78/2020–Central Tax, dated 15 October 2020, mandated HSN Code reporting in Table 12.
- GST Portal Advisory dated 09 January 2025, announced Phase 3 implementation effective January 2025.
Relevant Sections and Rules
|
Law |
Provision |
|
Section 37(1), CGST Act, 2017 |
Requires furnishing of outward supplies in GSTR-1. |
|
Section 31, CGST Act, 2017 |
Specifies the need for HSN Codes on invoices. |
|
Rule 46, CGST Rules, 2017 |
Details mandatory fields on tax invoices, including HSN/SAC Codes. |
🛠️ Phase-Wise HSN Code Reporting Implementation
|
Phase |
Effective Date |
For Turnover ≤ ₹5 Cr |
For Turnover > ₹5 Cr |
|
Phase 1 |
April & August 2022 |
2-digit (manual entry) |
4-digit (manual entry) |
|
Phase 2 |
1 Nov 2022 |
4-digit (manual + warnings) |
6-digit (manual + alerts) |
|
Phase 3 |
January 2025 |
4-digit (dropdown only) |
6-digit (dropdown only) |
Note: In Phase 3, manual typing of HSN codes is not allowed; users must select from dropdowns only.
📋 Table 12 Format in GSTR-1/GSTR-1A (January 2025 Onward)
After the update, Table 12 is divided into two tabs:
B2B Supplies and B2C Supplies.
|
Column |
Description |
|
Sl. No. |
Serial number of the entry |
|
HSN/SAC Code |
Select from dropdown (no manual entry) |
|
Description as per HSN Code |
Auto-filled after HSN selection |
|
UQC (Unit Quantity Code) |
As per Rule 46 |
|
Total Quantity |
Total quantity supplied |
|
Total Value of Supplies |
Total invoice value |
|
Taxable Value |
Amount on which GST is levied |
|
Integrated Tax/Central Tax/State Tax/Cess |
Tax breakup amounts |
🆕 New Enhancements for HSN Code Reporting
Here’s what's changing from January 2025:
- Dropdown-Only Selection ➔ Manual entry of HSN/SAC code disabled; only selection from dropdown.
- Auto-Populated Description➔ System auto-fills product description as per official HSN master.
- Separate B2B and B2C Tabs➔ Clear distinction in outward supplies makes reporting easier.
- Download HSN/SAC List➔ Taxpayers can download the complete HSN/SAC code list in Excel format.
- Product Name Search ("My HSN Master")➔ Users can search by product names saved earlier and auto-populate all fields.
📊 Validation Logic Explained (B2B and B2C)
Initial Warning Mode:
Mismatch between Table 12 and other tables (like 4A, 4B, 5, 6B, 6C, 7, 8, 9A-C, 15, 15A) will only generate warnings, not block filing.
|
Type |
Validation Details |
|
B2B |
Total value of B2B entries in Table 12 must match entries in Tables 4A,
4B, 6B, 6C, 8, 9A-C, 15, 15A. |
|
B2C |
Total value must match B2C values reported in Tables 5 and 7. |
📚 Section, Rule, and Notification Summary
|
Provision |
Applicability |
|
Section 37(1), CGST Act |
Outward supply return (GSTR-1) filing requirement. |
|
Section 31, CGST Act |
Mandatory HSN Code on tax invoices. |
|
Rule 46, CGST Rules |
Specifies mandatory fields for invoices, including HSN Code. |
|
Notification No. 78/2020 |
Compulsory HSN reporting from 2020; enhanced further in 2025. |
🧩 Practical Example: Filing with HSN Code
Suppose a taxpayer with ₹6 crore turnover sells Scrap Sale (HSN 72044900) in January 2025.
|
Field |
B2B Entry |
B2C Entry |
|
HSN Code |
72044900 (selected from dropdown) |
72044900 |
|
Description |
Auto-filled: "other ferrous waste and scrap..." |
Same |
|
UQC |
KGs (Kilograms) | KGs |
|
Total Quantity |
100 KGs |
50 KGs |
|
Total Value of Supplies |
₹200,000 |
₹90,000 |
|
Taxable Value |
₹200,000 |
₹90,000 |
|
Integrated Tax |
₹36,000 |
₹16,200 |
✔ System checks values automatically and issues a warning if mismatches occur.
✔ Taxpayer can download HSN Code lists to cross-verify offline.
✍️ Conclusion
The GST Portal’s Phase 3 update for mandatory HSN code reporting makes GSTR-1 filing more structured and accurate. Dropdown-only selection, auto-population of descriptions, strict validations, and separate B2B/B2C tabs will significantly improve tax compliance and data quality.
Businesses must adapt to these changes quickly to avoid mistakes, penalties, or late filing issues. Ensure your ERP/accounting systems and staff are trained for these important updates starting January 2025!
Read More: HSN Codes Guide 2024, GST Rates for Goods