What does mean HSN codes in GST
What’s HSN code?
HSN Code mean Harmonized Commodity Description and Coding machine, additionally called the Harmonized machine (HS) of tariff nomenclature is an across the world standardized machine of names and numbers to classify traded merchandise. these codes are essentially used to restore rate of tax on numerous items at the time of import/export. In Indian context it is proposed to apply HSN codes at bill level to make taxation device of global general. beneath GST supply invoices will be made by using taking pictures hsn codes in case of products and provider accounting codes in case of services.
HSN code of four digits for goods:
even though the world over HSN code is of 6-eight digits however in our context HSN code of four digits may be mandatory to start with for taxpayers having turnover more than 5 crore. Turnover could be taken on self statement foundation for IST 12 months and afterwards turnover of preceding year shall be used. In return shape rate of tax shall be car populated based totally on the HSN codes utilized in furnishing bill degree purchase or sale statistics. After finishing first yr below GST the turnover for preceding yr may be taken into consideration as yardstick for the use of HSN codes of 4 digits. the usage of HSN codes beneath its standards is to make GST systematic and globally regular.
HSN code of 2 digits for goods:
For taxpayers with turnover between Rs 1.5 Crores and Rs five Crores in the preceding monetary yr, HSN codes may be certain best at 2-digit bankruptcy stage as an non-obligatory exercise to start with. From 2d year of GST operations, bringing up 2-digit bankruptcy stage HSN Code might be mandatory for all taxpayers with turnover in preceding monetary 12 months among Rs. 1.five Crores and Rs. five.zero Crores. HSN code at 2 digit can be little easy for taxpayers and make GST an global well matched tax.
HSN codes in case of Export and Import:
HSN codes at 08 digits might be obligatory in case of export and imports. The GST regulation must be like minded with international standards. The concept of HSN codes was invented outdoor India and same is used by various member nations. The above parameters with admire to HSN code for items and Accounting Code for services will follow for filing the statistics in return relating to relevant invoice stage statistics for B2B substances (each intra-nation and inter-kingdom) and inter-country B2C elements (wherein taxable value according to invoice is more than Rs. 2.five lakhs).
blessings of HSN codes:
In case goods and offerings are recognized via their specific codes i.e. global too the possibilities of misinterpretation are very low. once more the taxpayers aren’t required to post description of goods and services in go back as the same is to be acquired from invoices which might be made on the premise of HSN codes and accounting code.
different critical observations:
even though positive limits have been fixed for obligatory use of HSN and service accounting code but any taxpayer can use those optionally if he dreams. The small training of dealers who have opted composition scheme are even now not required to apply HSN codes of two digits. The HSN code will be used in case of products and accounting code might be utilized in case of offerings.
For all B2B transactions (Inter-country and intra-country) invoice level targeted info might be uploaded i.e. each bill issued via the taxpayers will shape a part of GST go back. For all B2C transactions it’ll be obligatory to add invoice smart information if it exceeds 250000/-. the extent of compliance proposed in GST law seems very systematic but required enough instruction for specialists and taxpayers. At final in my non-public opinion the national impact of Bihar assembly election (Defeat of PM Modi) will be little terrible for rollout of GST from 01-04-2016.
Disclaimer: views expressed are strictly non-public. The content material of this file are entirely for informational purpose. It doesn’t constitute expert advice or advice. the author does now not receive any liabilities for any loss or damage of any kind springing up out of information in this text and for any movements taken in reliance thereon.