How to Amend HSN Code in GST Registration?

HSN codes can be confusing if you are initially trying to file your GST returns as a business. During this process, adding an HSN code to your GST registration is a critical task. This is because it ensures accurate tax classification and compliance. Businesses must report the correct values of HSN to avoid penalties and maintain transparency while filing returns.

For businesses that have not entered correct codes or made updates in their product offerings, it becomes crucial to know how to amend HSN code in GST registration to ensure continued compliance.

This article will delve into the question of how to add HSN code in GST registration. It will cover all of the steps in detail, along with providing key points to keep in mind during the process.

What is the HSN Code?

HSN, or Harmonised System of Nomenclature, is a system developed by the World Customs Organisation (WCO) and came into effect in 1988. It is used all over the world for classifying goods systematically. HSN code is generally a six-digit code that differentiates between products.

HSN number is the same for a certain product all over the world. Its recognition is accepted in over 200 countries. This is because it provides uniform classification of products, collection of statistics of international trade, and a customs tariff base.

India’s HSN codes were originally of 6 digits. However, to make them more precise and accurate, the government added two more digits to the code for certain business products. Currently, in India, there are both eight and six-digit HSN codes.

Importance of HSN Code in GST Registration

The reason why HSN codes are important is that they help make GST systematic and more acceptable globally. Primarily, these codes mitigate the requirement to provide detailed descriptions of goods.

This results in saving time and making the process of successful filing of GST much easier. Automation of GST returns also benefits from the presence of these codes.

Additionally, if businesses need to make corrections or product-related changes, understanding how to amend HSN code in GST registration becomes essential for accurate tax reporting and audit preparedness.

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How to Add HSN Code in GST Registration?

To add an HSN code to the GST registration process, you can just follow these simple steps:

Step 1: Log in to GST Portal

To start this process, first log in to the GST portal with the use of your password and username. After the successful log in you will see a dashboard on your screen.

Step 2: Navigate to ‘Add’ Option

From multiple options on that dashboard, you need to choose the ‘Services’ option. After that, select the ‘User Services’ option. Then choose ‘HSN/SAC Masters’. Lastly, click on the ‘Add HSN/SAC’ option.

Step 3: Enter all Correct Details of the HSN Code 

Upon selecting the option to add details, a list of fields will require filling. These respective fields include:

• HSN Code: You will need to enter all of the 6-digit HSN and 8-digit HSN codes for your product. Only enter the codes for products you are adding to the GST filing process. If any service or product you are adding does not have an HSN code, you can leave the field blank.
• Description: Next, you will need to put in a brief product description of those services or products which you added to the list.
• GST Rate: Finally, you will need to choose the applicable GST rate for those services or products. These GST rates will be in slabs of 0%, 5%, 12%, 18%, and 28%.

Step 4: Save HSN Code

You will need to select the SAVE button upon entering all of the basic details. After this, your HSN codes for the new products and services will be included in the HSN/SAC master.

Step 5: Verify the HSN Code

After filling in all the details, it becomes crucial to check for mistakes and verify the entered information. To do this, you can go to the ‘Search HSN/SAC’ section, and under that, select the ‘HSN/SAC Masters’ option.

Just once, enter the codes for all of the new HSNs you have entered and click on search. Verify the information alongside it. Check all of the details of the description, GST rates, and code.

Important Things to Remember while Adding HSN Code in the GST Portal

While adding HSN codes on the GST portal, you need to be very careful to avoid legal issues in the future. Thus, below are some crystal things you can keep in mind while you are doing so:

1. Use the Correct HSN Code: Ensure you use the correct HSN code for each product or service you add. The HSN code, a six or eight-digit classification, categorises goods and services based on their use, type, and nature. If you use the wrong HSN code, you may apply incorrect GST rates, which can cause legal complications.
2. Keep Your HSN Codes Up to Date: Regularly update your HSN codes, as GST rates for some products and services may change over a certain time period. When GST rate for any product or service changes, you must update the HSN code on the GST portal to reflect that revised rate.
3. Understand the GST Rates: Develop a clear understanding of the GST rates for different products and services. Authorities base GST rates on the type of product or service, and they range from 0% to 28%. To ensure accurate tax charges, you must know the correct GST rate for each item or service.
4. Use the Correct SAC Code for Services: Besides HSN codes for goods, use SAC (Services Accounting Code) for services. SAC codes operate similarly to HSN codes and determine the correct GST rate for services. When you provide a service, ensure you enter the correct SAC code on the GST portal.
5. Keep Records of HSN Codes: Always maintain accurate records of HSN codes for your products and services. This practice will help you update HSN codes easily when needed and support you in tracking tax liabilities while complying with GST regulations.

Mistakes to Avoid While Adding HSN Codes

Making mistakes is human nature. You just need to make sure you look out for these common mistakes that can create legal issues:

1. Do not use an old version of codes, which are the 2-digit codes. They are discontinued from current tax proceedings.
2. Never copy HSN codes from any third-party websites that are not verified.
3. Do not select the HSN codes which are not related to the products you offer just to lower the tax rates.
4. Never forget or miss updating the HSN codes for your products after you have updated or changed them.

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Amending HSN Codes in Your GST Registration

For the application for amendment of non-core fields like the HSN code, there is no specific form that needs to be filled out, unlike amendment of core field which necessitate the submission of FORM GST REG-14. The entire process is conducted directly on the GST portal.

Furthermore, you are not required to upload any supporting documents for this particular change.

Penalty for Missing or Wrong HSN Code

If you make a mistake and enter the wrong HSN code or miss entering the HSN code as a whole, you can face penalties. These penalties that the tax authority can impose, as per GST regulations, are as follows:

• For incorrect classification of HSN in the GST slab, a penalty of ₹25,000 (CGST + SGST) can be charged.
• During any kind of audit or assessment, wrong HSN codes can be flagged.
• Lastly, as a result of any mistakes, your input tax credit (ITC) claims can be denied or delayed.

Conclusion

Understanding how to amend HSN code in GST registration is just as important as knowing how to add it initially. As your business evolves, your product or service list may also change, making timely amendments crucial. Correctly updating or modifying the HSN code helps prevent GST mismatches, input credit issues, and compliance errors.

It also ensures smooth audits and protects you from penalties or tax notices. By following the right process, keeping information up to date, and verifying every detail entered in the GST portal, business owners can maintain accurate records and focus on growth with full regulatory confidence.

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