GSTN Advisory on Implementation of mandatory mentioning of HSN codes in GSTR-1 & GSTR 1A

Introduction

The GST Network (GSTN) has introduced significant changes in Table 12 of GSTR-1 and GSTR-1A under Phase-III, starting from the January 2025 return period. These updates aim to streamline the reporting process, ensure accuracy, and enhance compliance for taxpayers.

Here’s a detailed overview of the key updates and how they impact your GST filing.

Key Changes in Phase-III Implementation

1. Mandatory HSN Code Selection via Drop-down Menu
Manual entry of HSN codes has been discontinued. Taxpayers are now required to select HSN codes from a predefined drop-down list. This eliminates errors caused by incorrect manual entries and ensures uniformity in reporting.

2. Bifurcation of Table 12 into B2B and B2C Tabs
To simplify the filing process, Table 12 has been divided into two sections:

• B2B Supplies Tab: For reporting supplies to registered recipients.
• B2C Supplies Tab: For reporting supplies to unregistered recipients.

3. Introduction of Validations
GSTN has introduced validations to ensure the accuracy of reported values. These validations cross-check:

• B2B Supplies: Values in Table 12 against other tables like 4A, 4B, 6B, and others.
• B2C Supplies: Values in Table 12 against tables like 5A, 6A, 7A, and others.

Note: Initially, these validations will only trigger warnings for mismatched values, allowing taxpayers to file their returns without issues.

Enhanced Features for Seamless Filing

1. Downloadable HSN Code List
Taxpayers can now download the latest HSN and SAC codes with descriptions in Excel format using the “Download HSN Codes List” button in Table 12. This ensures that they always have access to updated information.

2. Searchable “My HSN Master”
A new searchable feature allows taxpayers to find and use their saved HSN details easily. Upon selection, fields like description, UQC, and quantity will auto-populate, saving time and reducing errors.

Mandatory Reporting Requirements for HSN Codes

Benefits of These Changes

1. Improved Accuracy: Eliminates manual errors in HSN reporting.
2. Streamlined Process: Tab-wise bifurcation for easier data segregation.
3. Compliance Simplification: Auto-population features save time and ensure correctness.
4. Validation Checks: Helps taxpayers maintain accurate records for seamless compliance.

How Taxpayers Can Prepare

• Update Filing Processes: Familiarize yourself with the drop-down selection method for HSN codes.
• Utilize New Tools: Leverage the “Download HSN Codes List” feature to access the latest codes.
• Check Values: Ensure accurate reporting in B2B and B2C supplies to avoid validation warnings.

Future Phases

GSTN has indicated that additional enhancements will be part of Phase-IV, with details to be shared in due course.

Conclusion

The Phase-III updates to Table 12 of GSTR-1 & GSTR-1A are a significant step towards simplifying GST compliance and improving data accuracy. Taxpayers should adapt to these changes and leverage the enhanced features for efficient reporting.

For further guidance and updates on GST compliance, stay tuned to Quickcomply.