The Goods and Services Tax Network ( GSTN ) has announced the commencement of Phase-III of the mandatory HSN code implementation for GSTR-1 and GSTR-1A, effective from the return period of January 2025. This phase introduces significant changes aimed at enhancing accuracy and compliance in reporting HSN (Harmonized System of Nomenclature) codes. Updates in Phase-III: Dropdown Selection for HSN Codes: ○ Manual entry of HSN codes has been discontinued. ○ Taxpayers must now select the correct HSN code from a predefined dropdown list. Audit Smart, Secure Strong: Lead the Digital Safety Frontier – Click here to know more

Bifurcation of Table-12: ○ Table-12 of GSTR-1 and GSTR-1A has been divided into two tabs: ■ B2B (Business-to-Business) ■ B2C (Business-to-Consumer) ○ This segregation enables separate reporting of supplies. Validation of Supplies and Tax Amounts: ○ Automated validation for values of supplies and corresponding tax amounts has been introduced for both B2B and B2C tabs.

○ Initially, these validations will function in a warning mode. Taxpayers failing to meet validation criteria can still proceed with filing, though warnings will show discrepancies. Audit Smart, Secure Strong: Lead the Digital Safety Frontier – Click here to know more Implications for Taxpayers: ● The dropdown feature for HSN codes aims to eliminate errors caused by manual entries.

● The bifurcation of Table-12 ensures a clearer distinction between B2B and B2C transactions.

● The warning mode for validations during the initial phase provides taxpayers time to adapt. In Short, the key updates include dropdown HSN selection, bifurcation of Table-12 into B2B and B2C tabs, and initial warning-mode validations. Subscribers can access the Detailed Advisory by clicking the Blue button below. To Read the full text of the Order CLICK HERE