Wrong HSN code on invoice
This query is : Resolved
18 July 2020
i m manufacturer
is there any penalty in case of wrong HSN code mentioned on invoice. & i want to export some goods we are sure about first 4 digits of HSN code, but for remaining code we are not sure.
is there any breach of law for mentioning wrong HSN code & if Yes the what is the penalty for the same.
is there any penalty in case of wrong HSN code mentioned on invoice. & i want to export some goods we are sure about first 4 digits of HSN code, but for remaining code we are not sure.
is there any breach of law for mentioning wrong HSN code & if Yes the what is the penalty for the same.
18 July 2020
Unless it has some custom duty or GST rate implication, it should not be a big issue.
19 July 2020
You would be exporting under LUT,right?. So GST applicability will not be an an issue.If you want to export with payment of tax then only there will be a question.Can you share the product description and 4 digits HSN?
03 August 2025
Yes, using a **wrong HSN code** on an invoice can potentially attract **penalties** under the **GST law**, especially in the context of **exports** and **differential GST rates**.
Let me address your situation in parts:
---
### ✅ 1. **Is there a penalty for wrong HSN code?**
Yes, under **Section 125 of the CGST Act**, a general penalty of up to **₹25,000** (CGST ₹12,500 + SGST ₹12,500) can be levied **if wrong HSN results in non-compliance**, especially in:
* **Wrong tax rate charged**
* **Incorrect credit passed to the buyer**
* **Mismatch in export classification (if claiming refunds)**
However, if the HSN mistake **doesn’t result in loss of revenue** or **rate difference**, authorities may **not impose** a penalty.
---
### ✅ 2. **What if you’re exporting goods under LUT?**
* If you're exporting **under LUT (without payment of tax)**, the **HSN error is less likely to affect refunds**, unless **customs requires precise classification**.
* However, if you export **with payment of tax**, **correct HSN** is essential to:
* Claim **IGST refund** correctly
* Avoid **query or rejection** from customs
---
### ✅ 3. **What if only first 4 digits are known?**
The **first 4 digits** refer to the **chapter heading** and are often sufficient for **broad classification**. But:
* For **exports**, customs may require the **6- or 8-digit HSN**.
* If you're unsure, consult the **GST Tariff Schedule** or **Customs classification experts** to avoid misclassification.
---
### ✅ 4. **Practical advice:**
* Mention the **correct 4-digit HSN** if unsure, and **do not fabricate** the last digits.
* **Avoid guessing** the full 8-digit code.
* Use CBIC's HSN finder: [https://cbic-gst.gov.in/gst-goods-services-rates.html](https://cbic-gst.gov.in/gst-goods-services-rates.html)
---
### 📌 Recommendation:
Please share your **product description** and the **4-digit HSN** you’re confident about. I can help you identify the correct **6- or 8-digit code**.
This will help you:
* Avoid classification disputes
* Ensure correct tax rates
* Prevent issues in GST refund or customs processing
Let me address your situation in parts:
---
### ✅ 1. **Is there a penalty for wrong HSN code?**
Yes, under **Section 125 of the CGST Act**, a general penalty of up to **₹25,000** (CGST ₹12,500 + SGST ₹12,500) can be levied **if wrong HSN results in non-compliance**, especially in:
* **Wrong tax rate charged**
* **Incorrect credit passed to the buyer**
* **Mismatch in export classification (if claiming refunds)**
However, if the HSN mistake **doesn’t result in loss of revenue** or **rate difference**, authorities may **not impose** a penalty.
---
### ✅ 2. **What if you’re exporting goods under LUT?**
* If you're exporting **under LUT (without payment of tax)**, the **HSN error is less likely to affect refunds**, unless **customs requires precise classification**.
* However, if you export **with payment of tax**, **correct HSN** is essential to:
* Claim **IGST refund** correctly
* Avoid **query or rejection** from customs
---
### ✅ 3. **What if only first 4 digits are known?**
The **first 4 digits** refer to the **chapter heading** and are often sufficient for **broad classification**. But:
* For **exports**, customs may require the **6- or 8-digit HSN**.
* If you're unsure, consult the **GST Tariff Schedule** or **Customs classification experts** to avoid misclassification.
---
### ✅ 4. **Practical advice:**
* Mention the **correct 4-digit HSN** if unsure, and **do not fabricate** the last digits.
* **Avoid guessing** the full 8-digit code.
* Use CBIC's HSN finder: [https://cbic-gst.gov.in/gst-goods-services-rates.html](https://cbic-gst.gov.in/gst-goods-services-rates.html)
---
### 📌 Recommendation:
Please share your **product description** and the **4-digit HSN** you’re confident about. I can help you identify the correct **6- or 8-digit code**.
This will help you:
* Avoid classification disputes
* Ensure correct tax rates
* Prevent issues in GST refund or customs processing
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- ITR 3 VALIDATION
- Brokage income from sale and purchase of property
- LTCG EXEMPTION AND TAX APPLICABILITY
- ITR-4- U/s.44AD- Financial Particulars of Business
- Regarding Withdrawal of unused amount in Capital Gain account scheme
- Error while validating
- Clarification on ITR 3: Is Sl. No. 64 required for 44ADA income?
- UNUTILISED CAPITAL GAIN FD
- Correction in filed Form 27Q - showing error due to deductee contact number
- 44AD business and F&O loss
- E way Bill in two transits covered_Supplier to ist cistumer and ist customer to end customer
- Accounting entry for instalment payments and gst obigations
- Purchase of Time Deposit in AIS
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Stamp Duty & Registration Fees on Sale Deed
- GST on Restaurant service
- Revision under Section 264 in The Income Tax Act, 1961
- TDS under section 195.
- Filing GST Returns after death of proprietor
Trending Online Classes
-
Input Tax Credit, GST refunds and Recovery of refunds- Roadblocks and way outs
CA Nipun Arora03 September 2025 -
GST LIVE Certification Course - 43rd Weekdays Batch(With Govt Certificate)
Industry Expert15 September 2025
CAclubindia
