In a continued effort to enhance transparency and streamline tax reporting, the Goods and Services Tax Network (GSTN) has announced the implementation of Phase-3 HSN code reporting in Table 12 of GSTR-1 and GSTR-1A, effective from the May 2025 return period. This marks a significant shift in compliance requirements under the Goods and Services Tax (GST) regime, following the earlier Phase-2 rollout in November 2022.
Stricter HSN Code Mandates Based on Turnover
As per Notification No. 78/2020 – Central Tax dated October 15, 2020, taxpayers are already required to report HSN (Harmonized System of Nomenclature) codes based on their Aggregate Annual Turnover (AATO) in the preceding financial year. In Phase-3:
- Taxpayers with AATO up to ₹5 crore must mandatorily report 4-digit HSN codes for all goods and services.
- Taxpayers with AATO above ₹5 crore must report 6-digit HSN codes.
Manual entry of HSN will be discontinued. Instead, users will select HSN codes from a dropdown menu. Additionally, the HSN master will auto-populate descriptions in a new field titled “Description as per HSN Code.”
Value Validations Introduced
Validation mechanisms will cross-check the value of supplies declared in Table 12 against other relevant tables across GSTR-1 and 1A, including for both B2B and B2C supplies. Initially, these validations will appear as warnings, not blocks, allowing taxpayers to continue filing returns while highlighting inconsistencies.
Key Enhancements in Table 12
To improve usability and accuracy:
- Table 12 has been split into two tabs: B2B Supplies and B2C Supplies.
- A new button, “Download HSN Codes List,” allows downloading of the updated HSN & SAC codes in Excel format.
- Taxpayers can now search their saved HSN master descriptions through a searchable “Product Name as in My Master” feature, with auto-fill capabilities.
Mandatory Reporting in Table 13
From May 2025, Table 13 of GSTR-1/1A, which captures details of documents issued, becomes mandatory. This table can no longer be left blank. Filing B2B or B2C supplies without completing Table 13 will now trigger error messages, preventing submission.
Phase-4 Plans Yet to Be Announced
GSTN has indicated that details regarding Phase-4 of HSN code implementation will be communicated in due course.
