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GST: CBIC issues Clarification on reporting 4-digit/6-digit HSNs

GST: CBIC issues Clarification on reporting 4-digit/6-digit HSNs

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The Central Board of Indirect Taxes and Customs ( CBIC ) has issued Clarification on reporting 4-digit/6-digit HSNs.

GST helpdesk is in receipt of some tickets at helpdesk wherein it was reported that certain 6-digit HSN codes are not available in HSN Master/ not accepted on e-invoice/e-Way bill portals.

Background: Notification No. 12/2017-Central Tax dated June 28, 2017, as amended vide Notification No. 78/2020 – Central Tax, dated October 15, 2020, mandates taxpayers to declare specified digits, as follows, of Harmonised System of Nomenclature (HSN) / Service Accounting Code (SAC) Code on raising of tax invoices, w.e.f. April 1, 2021.

S. No. Aggregate Turnover in the preceding Financial Year
1. Upto INR 5 crores
2. More than INR 5 crores

Number of Digitals of HSN Code
4
6

It may be noted that specific 6-digit HSNs, as available in the HSN/Customs Tariff (with corresponding description of goods) are allowed in the system. It also follows that the declaration of HSN at 4/6 Digits has to be out of valid HSN codes only.

However, there are instances that some taxpayers are trying to report truncated first 6-digits out of an otherwise valid 8-digit HSN; which are actually not available in Tariff at 6-digit level and with no corresponding description of goods; these are invalid and hence not being allowed in the System.

Taxpayers may, therefore note that based on the harmonious interpretation of the Notifications, as referred above, read with Customs Tariff Act, 1975, as made applicable to GST; the number of digits of HSN, as specified vide Notifications No. 12/2017 & 78/2020 (Central Tax), are the minimum number of digits of HSN to be mentioned on the invoice.

Example: Where HSN 6 digits are specified to be reported in invoice, valid HSN codes as available in tariff, at both 6-digits and 8-digits can be mentioned. Similarly, where HSN at 4-digits are specified, valid HSN codes as available in tariff, at 4-digit, 6-digit and 8-digit can be mentioned. However, the 4/6 Digit HSN Codes, which are not available in the tariff; along with specific description, Unit and GST Rate; are not allowed to be mentioned.

Further, if the HSN of any Goods/Service is otherwise valid but not accepted on GST Portal / e-invoice Portal / e-way Bill portal, please raise a ticket on GST Self-Service Portal: https://selfservice.gstsystem.in/ > Report Issue > Type ‘HSN’ in ‘Type of Issue/Concern’ search box > Select relevant sub-category, e.g. ‘e-Invoice – IRP – HSN Code related’.

Source: TaxScan

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GST
Mandatory to mention 4/6-digit HSN/SAC Code w.e.f. April 1, 2021

Mandatory to mention 4/6-digit HSN/SAC Code w.e.f. April 1, 2021

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The Central Board of Indirect Taxes (CBIC) issued Notification No. 12/2017-Central Tax dated June 28, 2017, to show specified digits of Harmonised System of Nomenclature (HSN)/ Service Accounting Code (SAC) Code on raising of tax invoices for supply of goods or services as under:

Subsequently, the above notification was amended vide Notification No. 78/2020 – Central Tax, dated October 15, 2020 to mandate 4/6- digit HSN/SAC Code on supply of goods or services on the tax invoices w.e.f. April 1, 2021:

Further, a proviso was inserted to provide that 4- digits of HSN Code is optional in respect of supplies made to unregistered persons i.e., B2C supplies for a registered person having aggregate turnover upto INR 5 crores in the previous financial year.

Thereafter, Notification No. 12/2017-Central Tax dated June 28, 2017 was again amended vide Notification No. 90/2020 – Central Tax, dated December 01, 2020 to provide for class of supply- ‘Chemicals’ whose HSN Code are required to be mentioned at 8-digit on the tax invoices.

Further, it is to be noted that the above changes of mentioning 4/6 Digit HSN/ SAC code, as applicable, are also required to be captured in Table 12 of Form GSTR-1 (i.e., details of outward supplies of goods or services) and therefore, corresponding changes are made in the same.

Furthermore, it is very important to mention the correct HSN/ SAC Code on the tax invoices and Form GSTR-1 as penalty of INR 50,000/- (INR 25,000/- each for CGST and SGST) can be levied for non-mentioning or mentioning wrong HSN/ SAC Code under Section 125 of the Central Goods and Services Tax Act, 2017 (i.e., General penalty).

However, it is to be noted that there are many disputes w.r.t. classification of the various goods and services like sanitizers, railway parts, fryums etc. Further, the disputes are also going on as to whether classification as per Notification No. 1/2017- Central Tax (Rate) dated June 28, 2017 (“Goods Rate Notification”) should be in line with explanation (iii) and (iv) of said notification vide which it is provided that “Tariff item”, “sub-heading” “heading” and “Chapter” in the Goods Rate Notification shall mean tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (“CTA”) and that rules for the interpretation of the First Schedule to the CTA including the Section and Chapter Notes and the General Explanatory Notes would be apply to the interpretation of the Goods Rate Notification which provides only 1,208 goods approx. as against more than 12,000 products under First Schedule of the CTA.

Source: Taxguru.

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Know the GSTR-1 Table-12 Upcoming changes on GST Portal: GSTN

Know the GSTR-1 Table-12 Upcoming changes on GST Portal: GSTN

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The Goods and Service Tax Network (GSTN) has notified the Upcoming changes in GSTR-1 Table-12 on GST Portal.

The Upcoming changes in Table-12 format of GSTR-1 Return are changes in the format of GSTR-1 Return and changes in the number of digits of the HSN Code to be reported.

From 1st April 2021 onwards, it is mandatory to report a minimum 4 digit or 6 digits of HSN Code in Table-12 of GSTR-1 on the basis of Aggregate Turnover on PAN in the preceding Financial Year.

If the Aggregate Turnover is Upto Rs. 5 Crore then Minimum 4 digit reporting of HSN Code, Mandatory reporting of all B2B supplies & exports (includes supplies made to SEZ units & developers and Deemed Exports) and Optional reporting of HSN Code for all B2C supplies will be there.

If the Aggregate Turnover is more than Rs. 5 Crore the Minimum 6 digit reporting of HSN Code and mandatory reporting of all supplies, including exports (includes supplies made to SEZ units & developers and Deemed Exports).

Source: TaxScan

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GST Evasion
Alcohol-based hand-sanitiser makers under scanner for alleged GST evasion

Alcohol-based hand-sanitiser makers under scanner for alleged GST evasion

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The Goods & Services Tax (GST) Authority has initiated a probe into alleged tax evasion by alcohol-based hand sanitiser manufacturers.

“Intelligence gathered indicates that some manufacturers, including alcohol-based hand sanitiser makers, are resorting to tax evasion/non-payment of GST by misclassifying the product,” a government source told BusinessLine.

The Directorate General of GST Intelligence (DGGI), using information from the Central Economic Intelligence Bureau and with the help of online shopping platforms, has prepared a list of 62 manufacturers and suppliers who are allegedly involved in this practice, the source added. It did not share the list citing pending investigation.

“While the mis-classification of hand sanitisers produced under various established brands is being looked into by various zonal units of DGGI, it is requested that mis-classification of hand sanitisers manufactured/supplied by sugar factories/distilleries in your jurisdiction may kindly be verified at your end in order to plug any revenue leakages,” a communication by DGGI, addressed to the Principal Chief Commissioners/Chief Commissioners of CGST & Custom, said.

Sources said many manufacturers and suppliers, including sugar mills & distilleries, are classifying alcohol-based hand sanitiser under tariff heading 3004 while actually it should be under tariff heading 3808 of HSN (Harmonised System of Nomenclature). The GST rate on products under tariff heading 3004 is 12 per cent while for those under 3808, it is 18 per cent. “Misclassification appears to have resulted in substantial evasion of GST,” another source said. An earlier estimate put the alleged evasion at over ₹50 crore, but it may have gone up considering the multi-fold increase in sales of hand sanitisers in the last 2-3 months.

Tariff heading 3004 of HSN lists medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put in measured doses (including those in the form of transdermal administration systems) or in forms or packings for retail sale, including Ayurvedic, Unani, Homoeopathic, Siddha or Biochemic systems medicaments, put up for retail sale. Tariff heading 3808 of HSN includes insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products.

Alcohol-based hand sanitiser has ingredients such as ethyl alcohol IP, glycerol IP, hydrogen peroxide IP, purified water etc. According to the source, hand sanitisers having ethyl alcohol as ingredient is an alcohol-based product and accordingly need to be classified under heading 3808 of HSN. “The active ingredient of ethyl alcohol IP is over 70 per cent in most of alcohol-based hand sanitiser,” the source said.

Global code

The tax authority also sought opinion from the World Customs Organisation (WCO) which has inferred that alcohol-based hand sanitisers are correctly classifiable under heading 3808 of HSN. HS Code (known as HSN Code in India) has been developed by WCO as a standardised system to classify goods all over the world in a systematic manner. HSN Code has 8-digit uniform code that classifies more than 5,000 products and is accepted globally.

In India, one can get hand sanitiser either in liquid, gel or in foam form. Alcohol-based sanitisers have higher market share. Since, no vaccine is available yet for Covid-19, a common advice for effectively avoiding the infection is cleaning hands with sanitisers containing at least 60 per cent alcohol. This has boosted sales which have almost doubled on a month-on-month basis in recent times.

Source: The-Hindu-Business-Line.

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  • Manage your GST and E-WayBill Software anytime anywhere using multiple devices

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gst refund claim
CBIC processes 12923 GST Refund applications involving claims worth Rs 5575 Cr amid Lockdown

CBIC processes 12923 GST Refund applications involving claims worth Rs 5575 Cr amid Lockdown

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CBIC said that it is fully committed to helping the GST taxpayers in the present COVID-19 situation. Since 30th March 2020, CBIC has processed 12923 refund applications involving claims worth Rs. 5575 Cr. While in the last week itself, CBIC has processed 7873 claims worth.. 3854 Cr. CBIC said that a trade and business-friendly measure taken by CBIC .de its Circular No. 133 da.d 31.03.2020. help GST returns filers to facilitate early ITC refunds and to ensure that the wrong ITC claims are not processed in the absence of relevant information, is misconstrued in certain sections of social media and other media as troubling the taxpayers in COVID -19 like situation.

CBIC said that this measure was taken into effect with GST Council’s approval in its 39th Meeting held on 14.03.2020. mitigate delays in I’M refunds faced by the taxpayers besides ensuring that wrong ITC claims are not processed. It had been brought to the notice of GSTC by various stakeholders including the taxpayers. It was noticed that lot of time is spent in the verification of whether the credit was availed on services and Capital Goods in certain categories for the refund claims.

CBIC said that in order. address the difficulty faced by trade in providing this data at the time of processing of claim leading to delays and an increase in compliance cost, it was decided in the GST Council. make declaration of classification codes a part of the application itself. The GST Council in the same meeting has also decided. allow bunching of periods across financial years. facilitate claim of refund by exporters. This would apply to applications filed after 31.03.2020. It may also be noted that the due date of all such applications which were due during 20th March 2020 and 29th June 2020 has been extended to 30.06.2020.

CBIC explained that the Circular No. 133 (da.d 31.03.2020) is with regard to the requirement to give HSN/SAC code along Rith the refund application. The GST Law doesn’t allow refund of credit availed on service,s and/or Capital Goods in certain categories. For example, Capital Goods ITC refund is not permissible for re.. of ITC on account of exports and other zero-rated supplies. Further, ITC availed on services and capital goods are not allowed to be refunded in the Inverted Structure Refimd category.

Source: Taxscan

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Only about 15% of taxpayers have filed GST Returns, low numbers worry CBIC chief

Only about 15% of taxpayers have filed GST Returns, low numbers worry CBIC chief

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With the last date to file GST Annual Return and GST Audit report fast approaching, a complex filing process and numerous data requirement has meant very few taxpayers have been able to comply with the filing process

In a letter to all Principal Chief Commissioners and Chief Commissioners of Central Tax, CBIC Chairman Pranab K Das writes that data available till August 3 shows that only 14,85,863 GSTR-9 has been filed, while all non-composition taxpayers are supposed to file annual returns. This number of taxpayers needed to file GST annual return stands at over one crore. Similarly, the status of filing GSTR-9A stands at 4,33,148 and GSTR-9C at 11,334. About 12 lakh registered taxpayers are required to get their accounts audited and filed under GSTR-9C.

The last date to file GSTR 9, GSTR-9A and GSTR-9C is August 31, 2019, but the dismal figures has prompted Das to get the tax Commissioners to help out with the process and expedite the return filing process.

“Considering the last date is approaching fast, there is a need to reach out to the taxpayers to ask and help them to file the annual returns/reconciliation statement before the due date. Wherever required, they should be guided through the various steps of the return filing process. Towards this end, I request you to organize outreach initiatives in your ones to help the taxpayers file their returns in time. Such outreach programme may be organized at the Commissionerate level as well as Division level. The overarching objective of the exercise is to ensure that the best help and assistance is available to taxpayers in filing their annual returns/reconciliation statement well before the due date,” says the letter from Das.

According to KPMG India, Partner, Harpreet Singh, most dealers are busy in undertaking multiple reconciliations for their pan India operations and sorting the differences. “Also, re-visiting all tax positions and agreeing on them with GST auditors to reduce qualifications is taking time” said Singh.

According to Chartered Accountant, Pritam Mahure, the low numbers of GST Compliances are attributable due to the complex and numerous data requirements for preparing GST Annual Return as well as GST Audit. “Few details, such as eight-digit product codes (HSN) are requested, although legally only four-digit HSN is required. Similarly, HSN-wise purchase summary is another requirement which was not required at the time of monthly GST return, but is now required to be furnished. Given this, GST Council should immediately look into these valid concerns of the GST payers and make the GST Annual Return and Audit process, Good and Simple, in-reality,” says Mahure.

Das in his letter adds that any systemic/policy issue faced by the taxpayer in filing the retur/reconciliation statement should be brought to the attention in the Board urgently.

“Though the numbers look poor at the moment, like any other statutory deadline the compliance would increase significantly with passage of each day towards the deadline” adds Singh.

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Source: Economic-Times.
GSTN
GSTN adds New Feature in Portal

GSTN adds New Feature in Portal

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The Goods and Services Tax Network ( GSTN ) has updated a new feature in the GST portal in connection with the filing of an application for ITC accumulated due to Inverted Tax Structure.

“While filing refund application of input tax credit (ITC) accumulated due to Inverted Tax Structure, the taxpayer can now enter his own GSTN in the inward supply detail statement on the portal,” GSTN said in a statement.

Recently, the GSTN enabled GSTR-9 on GSTN Portal for filing Annual Return. For Filing GSTR-9, an option of ‘Annual Return Tab’ has been enabled by the GSTN (Goods and Services Tax Network) which can be seen in the portal. The due date for furnishing the annual returns in FORM GSTR-9, FORM GSTR-9A and reconciliation statement in FORM GSTR-9C for the Financial Year 2017 – 2018 has been extended till 30.06.2019.

In January, the portal had updated two new features in the official website including System Generated Acknowledgement of Application of Appeal and the Population of Data from EWB System into Form GSTR-1. At the time of generating E-Way Bill for outward supply, taxpayers enter the details of outward supplies such as invoice number, Date, Value Tax etc. With the new functionality added in the portal, the taxpayers can now easily import these details of outward supply invoices, as indicated in the e-way bill at the time of preparation of Form GSTR-1, by clicking the import ‘EWB Data’ button on the GST Portal in following tiles, (i) B2B Invoices (ii) B2C Large Invoices (iii) HSN-wise summary of Outward supplies.

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Source: Tax Scan.
GST Return
New GST return forms released; compliance process simplified from April 1

New GST return forms released; compliance process simplified from April 1

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The goods and services tax (GST) network released the revised return forms which businesses would need to comply with from this year. The new forms would be operated on a pilot basis from April 1, 2019, and would be mandated across the country from July, according to the decisions of the GST Council.

The new and revised return format would obviate the need to furnish returns under the family of GSTR-1, GSTR-2 and GSTR-3, but the annual return GSTR-9 might continue, experts said.

The GST Council had suspended GSTR-2, a purchase return, and GSTR-3, input-output return, because of the complex form structure. On the other hand, GSTR-1, a sale return, and GSTR-3B, summary input-output return, remain. The new forms are uploaded following an exercise to simplify the returns under GST.

The new return formats — named “normal”, “sahaj” and “sugam” — would make the compliance process simpler for the smallest of businesses wherein taxpayers up to a turnover of Rs 5 crore would have an option to file any of the three forms.

For the revenue department, the new format would help in matching the invoices of the seller and the purchaser, and would help the department check evasion to a great extent. But at the same time, it is likely to increase clerical and administrative work for businesses.

The HSN-wise details need to be provided at the invoice level rather than the summary level. In addition, while details at 4-digit HSN codes are required in the current format, the new format would need those details at the 6-digit HSN level.

Under the new format, invoices can be reported on a continuous basis.

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Source: Business-Standard