why is there a provison that according to the turnover , number of HSN digits to be entered is governed.
What difference would it make if all the digits are entered, is it a big stress for an invoice preparer.
What made the gst council to prepare something like this?
HSN Code acts as an internationally accepted goods classification system, used in over 200 countries.
The HSN structure contains 21 sections, with 99 Chapters, about 1,244 headings, and 5,224 sub-headings. The commodity’s manufacturing and technological complexity define the section or chapter to which it belongs.
HSN Codes are comprised of 8 digits.
The first two digits of the HSN codes represent the HSN code chapter.
The heading of the goods is represented in the third and fourth digit of the HSN code.
The sub-heading of the goods is represented in the fifth and sixth digit of the HSN code.
The seventh and eighth digits add much more detailed classification.
Finding an accurate code for your goods is a bit complicated task. The more number of digits you choose to add in your classification the more technical and complicated it goes.
Therefore as per my view, the GST Council has made provision regarding no. of HSN digits depending upon the turnover, carrying less no. of digits for less turnover and more digits for more turnover. Because, it may be difficult for small business units to find a HSN Code that describes there goods very accurately this is because they might not have sufficient knowledge regarding technical characteristics of their goods or they might not be able to appoint some professional experts who hold that knowledge. But in big turnover units there are those professional experts who hold good knowledge of Technicality in the Goods as well as Complexity in Law and Taxation.
Further, there will be no legal issue if you use all the 8 digits in your Invoice. But yes, it's a big stress and time consuming task to find that 8 digits HSN Code.
Thanks
CAclubindia
