New revised edition of HSN 2022
With all the new changes, the government surely is ensuring tighter GST laws this year. There have been some significant updates in GST rules that are effective from 1st Jan 2022. One such major update has been in the area of Customs Tariff.
HSN 2022, the new revised edition of HSN published by the World Customs Organization (WCO) has into force from 1st Jan 2022. Generally, WCO does this revision once every 5 years. The HSN system of WCO forms the basis for the Customs tariffs in India. The Fifth Schedule to the Finance Act, 2021 has incorporated the changes necessary to align Customs Tariff to revised HSN 2022, with effect from 1st January 2022.
There are about 351 categories across industries and activities such as e-waste management, smartphones, drones, diagnostic kits etc. where major restructuring has been brought into effect or new sub-headings have been introduced. A synopsis of key amendments to HSN is available here.
CBIC has prepared a guidance note that has a comparative analysis of HSN as per 2021 and a revised 2022 list: A useful document to refer to while you are doing your impact analysis.
GST levy, collection and valuation for imports and to some extent for exports are based on Customs Tariff. Hence, a change in Customs Tariff will impact GST compliance related to exports and imports. As we understand, these changes are being discussed by GST and NIC teams and the taxpayers will be informed regarding the updates in the GST system, E-way Bill and E-invoice, as applicable.
Meanwhile, if you have exports and imports and are complying with Customs Tariff, it is recommended to analyze the amendments and identify the changes needed in your systems and processes. Be prepared for implementing the changes once the Government systems and rules get updated.