HSN Reporting Changes in GSTR 1 and GSTR 1A: New GSTN Advisory on HSN Validation Phase 3

In a significant step towards streamlining GST compliance, GSTN has issued a new advisory detailing changes to the HSN reporting process in Table 12 of GSTR-1 and GSTR-1A. These changes, effective from the February 2025 return period, are part of the Phase 3 rollout for HSN reporting. They aim to enhance the accuracy of GST filings while reducing manual errors and discrepancies.

Phase-Wise Changes in GSTR 1

Phase	Taxpayers with AATO up to ₹5 Crores	Taxpayers with AATO above ₹5 Crores
Phase 1 (Part 1) (Applicable from 01st April 2022)	– Mandatory 2-digit HSN code reporting. – Manual entry allowed. – Warning/alert for incorrect HSN. – Filing GSTR-1 allowed after warning message	– Mandatory 4-digit HSN code reporting. – Manual entry allowed. – Warning/alert for incorrect HSN. – Filing GSTR-1 allowed after warning message
Phase 1 (Part 2) (Applicable from 01st August 2022)	No change. same as above	– Mandatory 6-digit HSN code reporting. Rest of conditions same as Phase – part 1
Phase 2 (Applicable from 01st November 2022)	– Mandatory 4-digit HSN code reporting. – Manual entry allowed. – Warning/alert for incorrect HSN. – Filing GSTR-1 allowed after warning message	No change. same as above
Phase 3 (Applicable from Feb 2025 return period onwards)	– Mandatory 4-digit HSN code reporting. – Manual entry of HSN code not allowed at GSTN portal. – HSN codes to be selected from dropdown at GSTN portal. – “Description as per HSN Code” auto-populates based on HSN master. – Validations for consistency across B2B, B2C supplies and Table 12 values.	– Mandatory 6-digit HSN code reporting. – Manual entry HSN code not allowed at GSTN portal. – HSN codes to be selected from dropdown at GSTN portal. – “Description as per HSN Code” auto-populates based on HSN master. – Validations for consistency across B2B, B2C supplies and Table 12 values.

HSN Reporting Changes in GSTR 1 and GSTR 1A

Mandatory Reporting of HSN Codes:
a. Manual entry of HSN codes has been discontinued on the GST portal. Instead, taxpayers must select the relevant HSN codes from a dropdown menu on the GSTN Portal. This dropdown ensures standardization by automatically populating the description linked to the selected HSN code, eliminating errors caused by manual inputs.
b. A customized description from the HSN master will automatically populate in a new field labeled “Description as per HSN Code.”
c. Table-12 is now split into two tabs: B2B and B2C, to report these supplies separately. Additionally, validations for supply values and tax amounts have been added for both tabs.
Introduction of Value Validations:
a. The validations will check the values of B2B supplies reported in various tables (e.g., 4A, 4B, 6B, 6C, 8, 9A, 9B, 9C, and 15) against the values reported in Table-12.
b. Similarly, they will validate the values of B2C supplies reported in tables like 5A, 6A, 7A, 7B, 8 (unregistered), 9A (export/B2CL), 9B, 9C, 10, and 15 against the values reported in Table-12.
c. In cases of amendments, only the differential value from the original and amended figures will be considered for validation. This approach ensures accurate reporting of revised transactions.
d. Initially, these validations will operate in a warning mode. If a mismatch is detected, taxpayers will receive an alert but will still be allowed to file their returns. This phase is intended to help businesses adapt to the new validations before they become mandatory.
Enhanced Functionalities in Table 12:
a. Bifurcation of B2B and B2C Supplies: To improve clarity, the HSN summary in Table 12 is now divided into two distinct tabs: one for B2B supplies and another for B2C supplies. Taxpayers are required to report the HSN summary separately under these tabs.
b. Downloadable HSN Codes List: A new feature on the GST Portal allows taxpayers to download a comprehensive and updated list of HSN and SAC codes in Excel format. This list includes detailed descriptions of goods and services, helping businesses ensure accuracy in their reporting.
c. Searchable HSN Master: Taxpayers can utilize the “My HSN Master” feature to search for product descriptions they have previously saved. Upon selection, details such as the HSN code, description will be auto populated, streamlining the data entry process.

Key Updates:

User description for HSN code – New field added in HSN summary.
Mandatory Reporting: Table 12 (HSN Summary) and Table 13 (Document Summary) will be mandatory from February 2025 onwards.
Validation Errors: If there is data in other tables of GSTR-1/GSTR-1A but HSN Summary and Document Summary are not provided, a validation error will be encountered at the “Proceed to File” (Generate Summary) stage.
Error Codes: RET192539, RET192540
HSN Summary Without Other Data: If only the HSN Summary and Document Summary are saved, but no data is present in other tables of GSTR-1, an error will be triggered.
Error Code: RET192546

GSTN Error Messages:

RET192539: Details in Table 12 have not been entered. Kindly enter details and validate Table 12 before generating the summary.
RET192540: Please enter details in Table 13 before generating the summary.
RET192546: No data available in the tables of GSTR-1. Please enter relevant data to proceed.

Additionally, warning messages based on the values of supplies for HSN Summary will only be available on the GSTN portal. These warning messages will not be provided through APIs, so please take note of this limitation.

Implications for Taxpayers

These updates necessitate immediate attention from businesses to align their systems and processes with the new requirements. Key impacts include:

Streamlined buyer input tax credit: The GST portal will validate the HSN code input by the seller, reducing errors and enabling buyers to get proper records.
Increased seller responsibility: Sellers must be more careful to report the correct HSN codes to avoid incorrect GSTR-1 returns.
No immediate impact on buyer input tax credit: While incorrect HSN codes in GSTR-1 may not directly impact buyer input tax credit, they could raise compliance concerns during audits or scrutiny.

Solutions to Navigate These Changes

IRIS GST is already adapting to these enhancements to ensure a seamless transition for businesses. Here’s how IRIS GST addresses the changes:

Update: HSN summary now requires bifurcation into B2B and B2C categories.

Solution: IRIS GST is transforming the way businesses adapt to the latest GST changes. With its advanced system It ensures that invoice-level information is used to auto-calculate accurate HSN summaries that are bifurcated at the B2B and B2C levels, eliminating manual errors. Users benefit from seamless compliance with the new changes applicable from February 2025, while the system’s auto-validation tools guarantee error-free reporting. IRIS GST doesn’t just meet regulatory requirements—it empowers businesses with automated precision, making the transition smooth and stress-free. From proactive updates to real-time reporting, IRIS GST ensures businesses stay ahead in the compliance journey.

Conclusion

The evolution of GST law in India reflects a broader movement toward standardization, transparency, and insightful reporting. The latest updates to Table 12 of GSTR-1 and GSTR-1A, such as the bifurcation of HSN summary into “B2B Supplies” and “B2C Supplies,” mark a significant leap in this direction. By mandating the use of dropdown-based HSN code selection and introducing validation measures, the GSTN aims to reduce ambiguity and foster accuracy.

While these changes may seem burdensome initially, they pave the way for better compliance and analytical possibilities. Granular reporting allows regulators to track industry practices, ensure GST rate accuracy, and gain deeper insights into consumption patterns. For businesses, leveraging advanced GST solutions like IRIS can make these transitions smooth and efficient, ensuring compliance without disruptions.

Ultimately, these updates are not just about compliance—they are about creating a cohesive, efficient, and transparent tax ecosystem that benefits both regulators and taxpayers alike. Businesses that adapt today stand to gain significantly in tomorrow’s evolving GST landscape.