AgenciesThe Central Board of Indirect Taxes and Customs (CBIC) on Wednesday extended the basic customs duty and integrated goods and service tax exemptions for export-oriented units, by a year till March 31, 2022. The Board also made it mandatory for a GST taxpayer having turnover of more than Rs 5 crore in the preceding financial year, to furnish 6 digits HSN Code on invoices issued for supplies. The change has been made effective from April 1, 2021.
"BCD and IGST exemption for EOU’s extension is good news for all EOU’s as the upfront exemption is procedurally simple and easy to avail and has a positive impact on the cash flows," said Abhishek Jain, tax partner at EY. The Board has introduced a six-digit Harmonised System of Nomenclature Code or HSN Code and Service Accounting Code from April 1, 2021, on the invoices issued for supplies of taxable goods and services.
A taxpayer having a turnover of up to Rs 5 crore in the preceding financial year is required to mandatorily furnish 4 digits HSN code on B2B invoices. Earlier, the requirement was 4 digits and 2 digits respectively. Codes prescribed in the Customs tariff are used for the GST purposes too since common HSN codes apply to Customs and GST and manufacturers, importers and exporters have been commonly using them.
"Traders would mostly be using HSN codes furnished in the invoices issued to them by the manufacturer or importer suppliers. As such, a large number of GST taxpayers are already furnishing HS codes/SAC at 6/8 digits on a voluntary basis on the invoices, e -waybills and GSTR 1 returns," the Board said. Experts said that the industry needs to ensure that all required changes have been made and the ERP system is geared up to generate invoices with 6 digit HSN's, else the businesses will carry an exposure of being non-compliant and will not be able to generate e-invoices or face difficulties while filing GST returns.
"BCD and IGST exemption for EOU’s extension is good news for all EOU’s as the upfront exemption is procedurally simple and easy to avail and has a positive impact on the cash flows," said Abhishek Jain, tax partner at EY. The Board has introduced a six-digit Harmonised System of Nomenclature Code or HSN Code and Service Accounting Code from April 1, 2021, on the invoices issued for supplies of taxable goods and services.
A taxpayer having a turnover of up to Rs 5 crore in the preceding financial year is required to mandatorily furnish 4 digits HSN code on B2B invoices. Earlier, the requirement was 4 digits and 2 digits respectively. Codes prescribed in the Customs tariff are used for the GST purposes too since common HSN codes apply to Customs and GST and manufacturers, importers and exporters have been commonly using them.
"Traders would mostly be using HSN codes furnished in the invoices issued to them by the manufacturer or importer suppliers. As such, a large number of GST taxpayers are already furnishing HS codes/SAC at 6/8 digits on a voluntary basis on the invoices, e -waybills and GSTR 1 returns," the Board said. Experts said that the industry needs to ensure that all required changes have been made and the ERP system is geared up to generate invoices with 6 digit HSN's, else the businesses will carry an exposure of being non-compliant and will not be able to generate e-invoices or face difficulties while filing GST returns.
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