Rate Difference HSN Code for GST Filing
Rate difference entries arise when there is a change in the value of supply due to price revision, discount adjustment or change in GST rate. Understanding how rate difference is treated for HSN code and GST helps businesses pass correct credit or debit notes and avoid confusion in returns.
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What Is Rate Difference in HSN Code Classification?
Rate difference by itself is not a separate product or service. It is an adjustment that is linked to an earlier supply of goods or services. Because of this, there is usually no independent HSN code only for rate difference.
In practice, rate difference is documented through credit notes or debit notes that refer back to the original tax invoice. The HSN code that was used for the original supply is also considered for the rate difference adjustment.
Rate Difference SAC Code Classification and GST Rates
Here are some commonly used HSN codes and GST rates for this category
4 Digit SAC Code Classification
| HSN/SAC Code | HSN/SAC Code Title | GST Rate |
|---|---|---|
| 9971 | Other Financial and related services | 18% |
6 Digit SAC Code Classification
| HSN/SAC Code | HSN/SAC Code Title | GST Rate |
|---|---|---|
| 997162 | Insurance claims adjustment services | 18% |
* GST rates may vary based on the latest GST notifications and amendments
How Does GST Rate Difference Affect HSN Code Classification?
When GST rate or price changes after an invoice is issued, the adjustment is done through a credit note or debit note under GST law. The HSN code remains the same as the original supply, but the taxable value and tax amount are adjusted to reflect the difference.
Businesses should ensure that every rate difference note clearly mentions the original invoice number, date and HSN code so that both parties can match the entries in their returns. This also helps during reconciliation of GSTR two B and books of account.
Why Is Rate Difference Crucial for GST Filing and HSN Code?
Correct treatment of rate difference ensures that GST liability is neither understated nor overstated. If rate difference is not recorded properly, the supplier may pay excess tax or the recipient may claim excess input tax credit, both of which can invite notices.
Since rate difference usually follows the same HSN code as the underlying supply, maintaining a clear link between documents is essential. This helps tax officers trace the flow from original invoice to the credit or debit note during audits.
How to Account for Rate Difference in HSN Code for GST Returns?
In accounting software, rate difference for a sale is usually recorded through a separate voucher type but tagged to the same customer and the same HSN code as the original item. The impact then flows automatically to GSTR one through the credit or debit note sections.
Taxpayers should verify that all rate difference notes are correctly reported in the appropriate table of GSTR one and that the corresponding impact is visible to the recipient through GSTR two B. Regular reconciliation reduces the risk of disputes over tax amounts and credits.
Conclusion
Rate difference is an important adjustment concept in GST rather than a separate HSN classification. It normally follows the HSN code and GST rate of the original supply and is implemented through credit or debit notes. Clear documentation and correct linking of these notes to original invoices help businesses stay compliant and avoid interest or penalties.
