Notification No. 12/2017 – Central Tax Explained

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Notification No. 12/2017 – Central Tax: Seeks to notify the number of HSN digits required on tax invoice

GST: [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

G.S.R... (E).— In pursuance of the first proviso to rule 46 of the Central Goods and Services Tax Rules, 2017, the Central Board of Excise and Customs, on the recommendations of the Council, hereby notifies that a registered person having annual turnover in the preceding financial year as specified in column (2) of the Table below shall mention the digits of Harmonized System of Nomenclature (HSN) Codes, as specified in the corresponding entry in column (3) of the said Table, in a tax invoice issued by him under the said rules.

Table

Serial Number	Annual Turnover in the preceding Financial Year	Number of Digits of HSN Code
(1)	(2)	(3)
1.	Up to rupees one crore fifty lakhs	Nil
2.	more than rupees one crore fifty lakhs and up to rupees five crores	2
3.	more than rupees five crores	4

2. This notification shall come into force from the 1^st day of July, 2017.

(Dr. Sree Parvathy S.L.)
Under Secretary to the
Government of India

📚 Frequently Asked Questions (FAQs): Notification No. 12/2017 – Central Tax

Q1: What is HSN in GST?

HSN stands for Harmonised System of Nomenclature.
It is used to classify goods under GST and determine tax rates.

Q2: Is HSN mandatory on invoice?

Yes, based on turnover.
Different businesses must use different digits as per Notification 12/2017.

Q3: What if my turnover is below ₹1.5 crore?

No HSN required.
You can issue invoice without HSN code.

Q4: What is 2-digit HSN?

Basic classification.
It shows product category, not detailed specification.
Q5: What is 4-digit HSN?
Detailed classification.
It gives more specific product identification.

Q5: Is turnover calculated for current year?

No.
It is based on previous financial year.

Q6: What happens if I use wrong HSN?

Risk of penalty.
Also impacts tax calculation and compliance.

Q7: Does HSN apply to services?

No, services use SAC codes.

Q8: Can I use more digits than required?

Yes.
You can use higher digits for better clarity.

Q9: Is HSN same for all countries?

Mostly yes.
It is an international classification system.

Q10: Do small businesses need to worry?

Less compliance burden.
But correct classification still matters.

Q11: Should I take help for HSN selection?

Recommended.
Many businesses prefer experts:
https://finodha.in/gst-compliance/

Q12: Is this notification still relevant?

Yes.
Though later updated, base concept remains.

Q13: Can HSN affect GST rate?

Yes.
Wrong classification may lead to wrong tax rate.

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