GSTN Phase III: Mandatory HSN Code Reporting (May 2025)
Starting May 2025, GSTN has implemented Phase III of mandatory HSN code reporting in GSTR-1, a critical compliance change for businesses across India.
1. Who’s Now Affected?
- Businesses with turnover up to ₹5 crore/year must report 4-digit HSN codes.
- Businesses with turnover above ₹5 crore/year must report 6-digit HSN codes.
2. No More Manual Entries
- Manual typing of HSN codes is disallowed.
- HSN codes must be selected from a dropdown.
- On selection, a field “Description as per HSN Code” auto-populates.
3. Table 12 is Now Bifurcated
Table 12 in GSTR-1 now includes two tabs:
- B2B Supplies
- B2C Supplies
HSN codes must be reported separately in each tab.
4. Table 13 is Mandatory
- Document Summary in Table 13 is now compulsory for both B2B and B2C.
- GSTR-1 filing is not permitted unless Table 13 is filled.
5. New Portal Validations
- GSTR-1 auto-validates that values in Table 12 match invoice details (e.g., Tables 4A/5A).
- Validation is initially warning-only, but bifurcated tabs must be correctly filled if B2B supplies exist.
6. Reporting Glitches & Temporary Fix
- Pure B2C dealers face filing blocks due to mandatory B2B HSN field.
- Temporary workaround: Enter “0” in the B2B HSN code and value fields to proceed.
Impact on Businesses
| Impact Area | What You Should Do |
|---|---|
| HSN Master Setup | Update your HSN master — dropdown enabled only. |
| Team Training | Train your team on bifurcation and new validation checks. |
| Software Readiness | Ensure ERP/GST software supports dropdowns, UI, auto-fill, and validations. |
| Filing Preparedness | Ensure both Tables 12 & 13 are correctly filled before submission. |
Why This Matters
- Ensures accuracy and transparency in GST returns.
- Prevents ITC mismatches and liability errors.
- Helps customers claim Input Tax Credit smoothly.
- Avoids filing rejection and audit scrutiny.
Final Thoughts
These updates are not just procedural — they reflect GSTN’s commitment to structured and error-free data. As finance professionals and CAs, guide your clients to:
- Review and update their internal product masters
- Train on dropdown usage and bifurcated reporting
- Apply the “0 workaround” for B2C-only filers until the GSTN portal is fixed
• Reviewing and updating internal product masters
• Training on dropdown usage and bifurcated reporting
• Applying the “0 workaround” for pure B2C filers until GSTN fixes the portal
glitch
