Yes, HSN codes are mandatory for businesses with an aggregate turnover of more than ₹1.5 crore. The requirement is phased based on the preceding year's turnover: businesses with a turnover between ₹1.5 crore and ₹5 crore must use at least a 2-digit code, while those exceeding ₹5 crore must use a 4-digit or 6-digit code.
Phase 2 required businesses with a turnover up to ₹5 crore to use 4-digit HSN codes, while businesses above ₹5 crore maintained 6-digit codes. Manual entry continued to be allowed, with the system flagging errors but still allowing for submission of the return.
The HSN codes also help in supporting input tax credit claims and improving the accuracy of tax filings. Only businesses with an annual turnover of less than Rs. 1.5 crore are exempt from detailing HSN codes in GSTR-1 returns.
The GST limit for composition schemes in India is Rs. 1.5 crore turnover per annum. Composition schemes are voluntary schemes available for small businesses with annual turnovers up to Rs. 1.5 crore who can opt for fixed tax rates instead of regular GST rates.
Yes, HSN codes are required, but small businesses with turnover below ₹5 crore are exempt from using them in B2C transactions.
Taxpayers with a turnover above Rs. 5 crores must report HSN codes at a 6-digit level. For those with a turnover up to Rs. 5 crores, reporting is at a 4-digit level for B2B supplies.
HSN Code System Under GST
With the introduction of GST, HSN codes are implemented through a 3-tiered system: Turnover under ₹1.5 crore: No requirement to use HSN codes. Turnover between ₹1.5 crore and ₹5 crore: Mandatory use of 2-digit HSN codes. Turnover over ₹5 crore: Requirement to use 4-digit HSN codes.
Businesses with annual sales of Rs. 40 lakhs or more for goods, and Rs. 20 lakhs or more for services, must register for GST. If the turnover exceeds the allowed threshold, there is a penalty for failing to register under GST.
GST is leviable only if aggregate turnover is more than 20 lacs. (Rs. 10 lacs in 11 special category States).
GST Turnover Limit for Goods Suppliers
If you are supplying goods only, then in normal states the gst threshold limit for registration is ₹ 40 lakh per year. In special category states the limit is typically ₹ 20 lakh.
Phase 2: Mandatory HSN Reporting (Effective from 1st November 2022) Applicability: Businesses with AATO (Aggregate Annual Turnover) exceeding ₹5 crore must report 6-digit HSN codes in Table 12 of GSTR-1. Businesses with AATO up to ₹5 crore must report 4-digit HSN codes.
Section 44AD is a presumptive taxation scheme that allows taxpayers to pay tax on a presumed percentage of their annual turnover given that the annual turnover is less than Rs. 2 crores (Rs. 3 crores if 95% of receipts are through online modes).
Taxpayers are required to mandatorily report 4-digit HSN codes for goods & services. Manual user entry is allowed for entering HSN or description and warning or alert message shall be shown in case of manual HSN. However, taxpayers will be able to file GSTR-1 after manual entry.
If you have exceeded the threshold you must register for GST. You reach the GST turnover threshold if either: your current GST turnover – your turnover for the current month and the previous 11 months – totals $75,000 or more ($150,000 or more for non-profit organisations)
Under GST Invoice Rules and Format, suppliers are required to mandatorily display the HSN code or SAC code of the goods or services supplied on an invoice. However, in order to make compliance easier for small and medium-sized enterprises, the requirement for disclosing HSN code on invoice has been relaxed.
If your organisation is registered as an MSME, you can add its MSME details and display the MSME/Udyam Registration Number in your organisation's address in transaction PDFs to stay compliant with section 43B(h) of the Finance Act 2023.
The latest update from the GST E-invoice system on December 04, 2023, mandates taxpayers with an Aggregate Annual Turnover (AATO) of Rs. 5 Crores and above to include a minimum of 6 digits of the HSN code in e-Invoices. This requirement will be effective from December 15, 2023.
GST Exemption Limit
Under the Goods and Services Tax (GST) regime in India, businesses whose annual revenue exceeds specific thresholds are required to register and pay GST. Currently, the GST Exemption Limit is set at Rs. 40 lakhs for goods and Rs. 20 lakhs for services.
Conclusion. You do not require an audit if your firm sales and gross receipts for any given fiscal year total less than ₹2 crores. However, you have to comply with the GST audit if your yearly turnover is above ₹5 crores. It is imperative to adhere to the GST audit checklist and the necessary audit types.
As recently as January 2022, the limit is Rs. 1 crore for businesses and Rs. 50 lakhs for professionals.
What is the Minimum Turnover Limit for GST Registration? Businesses are required to register for GST and pay tax on their annual turnover if their annual revenue exceeds Rs. 40 lakhs in the case of goods supplied and Rs. 20 lakhs for the supply of services.
A taxpayer must get a tax audit done if their business's sales, turnover, or gross receipts are over ₹1 crore, or if their profession's earnings exceed ₹50 lakh in a financial year. There are other situations where a tax audit might also be required.
Why is HSN important under GST? The purpose of HSN codes is to make GST systematic and globally accepted. HSN codes will remove the need to upload the detailed description of the goods. This will save time and make filing easier since GST returns are automated.
HSN Code 997313: Leasing or rental services concerning construction machinery and equipment with or without operator.
The World Customs Organization (WCO) developed this multipurpose international product nomenclature in 1988 to systematically facilitate global goods classification. While the rest of the world commonly refers to the 6-digit codes as HS Code, in India, it's more commonly known as HSN Code.