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Advisory Regarding Revamped HSN Code Functionality

Quick Summary

  • The updated "Search HSN" tool now uses einvoice databases and AI to help users find HSN codes with common trade terms.
  • Users can search HSN codes by entering either numbers or descriptions, and the system will suggest the five closest matches.
  • The tool shows related HSN codes in a table, including 4digit, 6digit, and 8digit codes, with links for more details.
  • Taxpayers can submit a ticket if they cannot find an HSN code and download the full list of codes in Excel format.
  • The new HSN code features aim to make GST filing more accurate and reduce errors for businesses in India.

The Customs Tariff Act, 1975 provided the taxpayer with the ability to search the technical description of any specific HSN code of goods or services which might be used in trade against the HSN description through the provision of the Search HSN facility.

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The “Search HSN” functionality has been updated by connecting it with an e-invoice database and artificial intelligence techniques in the following ways to lessen this problem and make the functionality user-friendly:

  1. The functionality for searching HSN codes has been improved, so taxpayers can now use common jargon or trade descriptions of the goods and services as they are known in the industry. The description or a portion of a description is provided to aid taxpayers’ search for the  HSN Code .
  2. The facility is accessible both before and after logging in. Users and taxpayers can access the same by using the menu below:

Select Services from the homepage, User Services from the drop-down menu, and navigate to Search HSN code.

  1. The two alternatives, HSN and Description, are offered as radio buttons, and the taxpayer may select either one as needed to search HSN/Description.
    1. Search of description based on HSN:
      1. The taxpayer can search for the HSN Code for every good or service.
      2. If a search is based on HSN, only numbers may be entered in the search box.
      3. If you type HSN in the search box, the five closest descriptions will appear in the option that automatically suggests items for that HSN.
      4. The taxpayers can then decide which option will most likely apply to their situation.
    2. Search of HSN based on Trade, Commercial or Technical description:
      1. The search function allows taxpayers to conduct searches by providing technical or commercial descriptions of the necessary items or services.
      2. Following their selection of the “Description” option, taxpayers must decide whether they need to find products or services.
      3. When a description is entered in the search box, the five closest HSN codes with the auto-suggested dropdown will display descriptions related to the given description.
      4. The taxpayer can then decide which HSN and description pair is pertinent.
  2. The database will display the three most common trade descriptions of the specified goods or services and the corresponding technical specifications to the taxpayer in the search results.
  3. Taxpayers can examine additional HSN Codes associated with their search. For example, if a 4-digit HSN code is searched, the related 6-digit and 8-digit HSN codes will also be displayed in the resultant table under “Other relevant HSN code(s)”. Similarly, when searching for a 6-digit HSN code, the associated 8-digit HSN code is also displayed. When an 8-digit HSN code is searched, however, linked HSN will not be displayed, as an 8-digit code is the most accurate code. The associated HSN Codes are displayed and hyperlinked in the resultant table, and taxpayers can click on the hyperlinks to see more information on the said HSN.
  4. The GST Self-Service Portal allows taxpayers to submit a ticket if they cannot locate the HSN of any products or services. Additionally, taxpayers can access the whole list of HSN Codes and their technical explanations in Excel format by clicking on the link “Download HSN in Excel Format” provided at the bottom of the page.

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Conclusion

The advisory regarding the revamped HSN code functionality is a positive step towards streamlining the GST system in India. The new features introduced in the HSN code functionality will enable taxpayers to report their supplies more accurately, and also help in reducing errors and mismatches in the filing process.

It is important for taxpayers to familiarize themselves with these changes and ensure that they comply with the new requirements to avoid any penalties or fines. Overall, this move will contribute towards the ease of doing business in India and improve the country’s tax compliance ecosystem.