Updates on HSN Code Reporting in GST Returns 2025

How Small Businesses Should Handle HSN Code Reporting in GST Returns This Year

For many small business owners, GST compliance can often feel like navigating a maze of changing rules. But when it comes to reporting HSN (Harmonized System of Nomenclature) codes in GSTR-1, especially after the latest changes by the GST Network (GSTN), the process is beginning to look a little clearer—at least for the financial year 2024–25.

If Your Turnover Is ₹5 Crore or Less: Here's What to Know

For Sales to Consumers (B2C)

Invoices: You’re not required to mention HSN codes on invoices issued to consumers. This means you can continue billing your retail customers without having to figure out HSN classifications for every product sold.
GSTR-1 (Table 12 – B2C tab): Filling in the HSN code here is purely optional. If you skip it or enter zero, it won’t create any issues or block your return from being filed.

For Sales to Businesses (B2B)

Invoices: This is where the rules get stricter. You must include HSN codes on all B2B invoices. At a minimum, you’re expected to report 4-digit HSN codes.
GSTR-1 (Table 12 – B2B tab): You also need to summarise your HSN-wise sales in this section. If you leave it blank or enter an incorrect code, the system will flag it and prevent you from filing the return.

Here’s a quick snapshot:

Supply Type	HSN on Invoice	HSN in GSTR-1 (Table 12)	Mandatory?
B2B	Yes	Yes (B2B tab)	Yes
B2C (≤ ₹5 cr)	No (optional)	No (optional or zero)	No

If Your Turnover Exceeds ₹5 Crore: Stricter Rules Apply

For larger businesses, there’s less room for flexibility.

B2C Supplies: Now, even sales to end-consumers must carry HSN codes—at least 4 or 6 digits, depending on your product category.
B2B Supplies: You're required to report 6-digit HSN codes.
No Manual Entry Allowed: You can’t simply type in an HSN anymore. The GST portal will only allow you to choose codes from a dropdown list, which also fills in the product description automatically.

What’s New in the GSTR-1 Filing System (As of May 2025)

The GSTN has also made some user-friendly tweaks to the GSTR-1 portal:

Clear Segregation in Table 12: B2B and B2C reporting sections are now split for clarity. For smaller businesses, B2C HSN remains optional.
Auto-fill Functionality: Once you select the HSN from the dropdown, the product description will automatically populate—no need to fill it in manually.
Downloadable HSN List: A searchable list is available to help you find the right code.
System Warnings:
- If you forget to fill in HSN codes for B2B entries, you won’t be able to file your return.
- If B2C codes are left blank (and your turnover is within ₹5 crore), the system will only issue a warning—you can still proceed with filing.

Tips for Smooth Filing This Year

If your business turnover is ₹5 crore or less, here’s how to stay on the right side of GST compliance:

Always provide HSN details for all B2B sales—both on invoices and in GSTR-1 Table 12.
For B2C, feel free to leave the HSN field empty or enter zero. There’s no penalty.
Expect system-generated warnings for missing B2C HSNs, but don’t worry—they won’t block return submission.
Stay informed by regularly checking GSTN updates—thresholds and requirements can change.

Final Word

To sum up, for FY 2024–25, if you’re in the B2B space—even as a small business—you must get your HSN reporting in order. For B2C sales, particularly if your turnover is ₹5 crore or less, you’ve been given a breather. But as GST systems evolve, staying updated is just as important as staying compliant.