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. However, there are numerous cases of goods and services where the technical descriptions supplied in the HSN descriptions of the Customs Tariff Act, 1975 and the functionality mentioned above diverge from the common descriptions used in trade in common vernacular, i.e. trade descriptions. Therefore, it was difficult for the taxpayer to discover the relevant HSN codes concerning a common description.
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:
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.
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.
The two alternatives, HSN and Description, are offered as radio buttons, and the taxpayer may select either one as needed to search HSN/Description.
Search of description based on HSN:
The taxpayer can search for the HSN Code for every good or service.
If a search is based on HSN, only numbers may be entered in the search box.
If you type HSN in the search box, the five closest descriptions will appear in the option that automatically suggests items for that HSN.
The taxpayers can then decide which option will most likely apply to their situation.
Search of HSN based on Trade, Commercial or Technical description:
The search function allows taxpayers to conduct searches by providing technical or commercial descriptions of the necessary items or services.
Following their selection of the “Description” option, taxpayers must decide whether they need to find products or services.
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.
The taxpayer can then decide which HSN and description pair is pertinent.
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.
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.
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.
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.