Amendments in GST on E- Invoicing & HSN Code

Amendments in GST on E- Invoicing & HSN Code

E- Invoicing:

‘E-Invoicing’ is a system in which B2B (Business to Business) invoices are authenticated electronically on the GST portal. Under the electronic invoicing system, a unique identification number will be issued against each and every invoice by the Invoice Registration Portal (IRP) to be managed by the GST Network (GSTN). 

Invoice Registration Portal (IRP) is launched for the purpose of real time data sharing GST portal and E invoicing portal that eliminate the manual data entry in GSTR-1 as well as Part 1 of E way bills.  However, GST department issued an update on 1st February 2021 that while pulling the e-invoice data into the GST System, details of some invoices were not getting auto- populated into the GSTR-1. Complete data will take some more time to update. Hence taxpayers are advised not to wait for the complete auto-population of data, and instead proceed with preparing and filing the GSTR-1, by the due date, based on the data as per their records.

Applicability:

E- Invoicing is applies from 1st Oct-20 to all taxpayers whose aggregate turnover has exceeded Rs.500 crore limit in any of the preceding financial years from 2017-18 to 2019-20 (Notification No.61/2020). Further, from 1st January 2021, the above limit is changed to 100 crore (Notification No.88/2020). Further, from 1st April 2021, the above limit is changed to 50 crore (Notification No. 5/2021).

Not Applicable to:

E-Invoicing is not applicable to Specified Businesses such as SEZ Unit, Insurer, Banking Company, Financial Institution, NBFC, GTA Service, Passenger Transport Service, and Admission to Multiplex for Films.

Eligibility for ITC:

If the Supplier of Goods and Services are required to issue E-Invoices and not comply with this requirement then no ITC is available to the Purchaser.  For this condition, it’s very difficult for the buyer to ascertain whether E- invoicing is applies to supplier or not. It’s better to take an Undertaking from the supplier.

Generation :

All the ERP software provides API backlinking of the ERP with the E-invoicing portal on real time basis to authenticate the invoice by a single click but under manual process, Bulk E- invoicing offline tool should be used and the JSON file uploaded in the IRP portal.

HSN Code Applicability:

CBIC (The Central Board of Indirect Taxes) issued Notification No. 12/2017-Central Tax dated 28th June, 2017, to show specified digits of Harmonised System of Nomenclature (HSN)/ Service Accounting Code (SAC) Code on the tax invoices for supply of goods or services. Further, the above notification was amended vide Notification No. 78/2020 – Central Tax, dated 15th October, 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:

Sr. NoAggregate T/O in Preceding F.YNo Of Digits of HSN Code upto 31st Mar-21No Of Digits of HSN Code from 1st April-21
1Upto 1.5 Crores04
21.5 Crores to 5 Crores24
3More than 5 Crores46

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

Along with above notification 8 digits of HSN code is mandatory in case of export and imports under the GST.

Penalty:

Under section 125 – General Penalty of the Central Goods and Services Tax Act, 2017 n case of non-mentioning or mentioning wrong HSN code under the Goods and Service Tax Act, the maximum penalty of INR 50,000/- ( INR 25000/- for CGST and SGST each) shall be levied.

For the correct HSN code do visit on https://cbic-gst.gov.in/gst-goods-services-rates.html.

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