Direct Tax Services
Select Your Location
The Union Finance Minister Nirmala Sitharaman, in the 42nd GST council meeting held via video conferencing on 5th October 2020, concluded the need to disclose the HSN/SAC codes in the GST invoice.
Later, the CBIC (Central Board of Indirect Taxes and Customs) has published the HSN/SAC code’s mandatory declaration in the GST invoice. However, there are specific requirements, which we will look into in this article.
Table of Contents
HSN codestands for Harmonized System of Nomenclature. The system was introduced for the systematic classification of goods across the world. It is a 6- digit uniform code used to classify more than 5000 products worldwide. The World Customs Organization (WCO) developed the HSN and it came into effect from 1988.
The HSN system is used by many countries because:
In India, 6-digit code of HSN was initially used, later 2 more digits were added by the customs to make it 8- digit.
The HSN code contains 21 sections, 99 chapters, about 1244 headings & 5244 subheadings.
For example, 62.13.90-HSN code for Handkerchiefs. Let us understand the breakup of the HSN code.
SAC Code is the Services Accounting Code developed by the CBIC (Central Board of Indirect Taxes and Customs) to classify services for better measurement, taxation & recognition. SAC codes are controlled by the Central Board of Excise and Customs (CBEC).
These codes are based on HSN (Harmonized System of Nomenclature), which is recognized internationally to codify all the products in the world.
These codes provide a framework for the collaboration of data of sale & purchase and analyze the same. The system also permits GST compliance based on international standards.
For example, 998314- SAC code for Information Technology (IT) Design & Development services. Let us understand the breakup of the SAC code.
The HSN/SAC codes are important as it is used to:
The major difference between the two is that:
The CBIC (Central Board of Indirect Taxes and Customs) has published the HSN/SAC code’s mandatory declaration in the GST invoice.
The first proviso to Rule 46 of the CGST rules, 2017, was amended to give effect to the notification published by the CBIC. It says that the declaration of the HSN/SAC code is mandatory in the GST invoice.
The amended proviso states that w.e.f 01-04-2021:
The following table would illuminate the current requirement of HSN/SAC on invoice & its comparison with expected change recommended by GST Council:
According to the Section 125 of the Central Goods and Services Tax Act, 2017 a penalty of Rs. 50,000 (INR each for CGST & SGST) can be imposed for non- mentioning or wrong mentioning of the HSC/SAC code.
The CBIC (Central Board of Indirect Taxes and Customs) has published the HSN/SAC code’s mandatory declaration in the GST invoice. The first proviso to Rule 46 of the CGST rules, 2017, was amended to give effect to the notification published by the CBIC. It says that the declaration of the HSN/SAC code is mandatory in the GST invoice.
Read our article:HSN Code Under GST – How to Implicate It?
Completed BA LLB from JEMTEC, School of Law, Greater Noida (Affiliated to GGSIP University, New Delhi). I have an experience of about 2 years in various fields of corporate laws, but I have a keen interest in researching on legal issues and to gain knowledge. I always strive to bring the best to work on what I do.
Many investors use fixed deposits as their primary investment vehicle. Investors with a high-ri...
The main idea of CDS, which was initially to give banks a way to transfer credit exposure, has...
Black money has been the subject of heated political debate in India for a long time. Successiv...
The Apex Court pronounced a judgement in the case titled Tata Motors Vs The Brihan Mumbai Elect...
Since economies are moving towards digitalisation and making it feasible to conduct transaction...
The Alternative Investment Funds (AIFs) Pro-rata and Pari-Passu Rights Proposal Consultation Pa...
The Financial Action Task Force, i.e. FATF (the Force), is the global money laundering and terr...
Advance tax refers to the payment of the tax liability before the end of the relevant financia...
On 11.12.15, the Hon’ble Delhi High Court (HC) pronounced a landmark judgement in the case ti...
Money laundering can be defined as the process of illegal concealment of the origin of money ob...
Are you human?: 8 + 5 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
In the current scenario, the goodwill attached to the brands is an essential guiding factor for the consumers to de...
23 Apr, 2020
The GST council meeting took a significant decision about the fate of realty firms in the GST regime. The council r...
13 May, 2019
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!