HSN codes on invoices and in GSTR-1 table 12: 4 digits or 6

What are HSN and SAC codes?

HSN codes classify goods and SAC codes classify services, so the code on an invoice line tells the tax department what was supplied and which rate should apply. HSN stands for Harmonised System of Nomenclature, a numbering system used for goods across most of the world. SAC, the Services Accounting Code, does the same job for services and usually starts with 99.

• Goods take an HSN code, for example a steel rack or an office chair.
• Services take a SAC code, for example repair work or transport.
• The first digits name the broad chapter; more digits narrow it down to a heading and then a sub-heading.
• The rate follows the code, which is why a wrong code can lead to a wrong rate.

How many HSN digits does your invoice need?

As of October 2026, a business with aggregate annual turnover (AATO) up to ₹5 crore must show at least 4 digits of HSN, and a business above ₹5 crore must show 6 digits. The same digit rule applies to what you report in GSTR-1 table 12.

Exporters often work with the full 8-digit code on shipping documents, because customs classification goes deeper than GST. If you export, confirm the digits you need with your CA or customs broker before you change product codes.

Ask your CA how your turnover is counted if you have more than one GSTIN. If you expect to cross ₹5 crore, ask your CA when to move your products to 6-digit codes.

What changed in GSTR-1 table 12?

Table 12 of GSTR-1 now splits the HSN summary into a B2B tab and a B2C tab, and the HSN code is picked from a dropdown instead of being typed. GSTN announced this in its advisory of 11 April 2025, and its validations began in warning mode.

• B2B tab: HSN lines from invoices to registered buyers with a GSTIN.
• B2C tab: HSN lines from sales to unregistered buyers and consumers.
• Dropdown only: you can only report a code that exists in the GST master list, so a made-up or mistyped code is not accepted.
• Description: the portal fills the description from the code you pick, so the free-text description you used to type matters less.

The practical effect is simple. Your books must already know which invoice was B2B and which was B2C, and every product must carry a code that exists in the master list.

How is the HSN summary built from invoice lines?

The HSN summary adds up every invoice line in the period by HSN code: quantity, taxable value and each tax head. Here are two October invoices from Lakshmi Steel Furnitures, the fictional Coimbatore business used across this site. Its turnover is below ₹5 crore, so it uses 4-digit codes.

1. 1

   INV-2026-27-0215 to Ravi Stores, Coimbatore (B2B, within Tamil Nadu)

   2 steel racks at ₹4,990 (HSN 9403) = ₹9,980 and 4 mesh office chairs at ₹6,450 (HSN 9401) = ₹25,800. Taxable ₹35,780, CGST 9% ₹3,220.20, SGST 9% ₹3,220.20.

2. 2

   INV-2026-27-0216 to Nandi Office Systems, Bengaluru (B2B, Karnataka)

   3 steel racks at ₹4,990 (HSN 9403) = ₹14,970 and 10 LED panels at ₹1,850 (HSN 9405) = ₹18,500. Taxable ₹33,470, IGST 18% ₹6,024.60.

Check the totals against the invoices. Taxable value ₹35,780 + ₹33,470 = ₹69,250. Tax ₹6,440.40 on the first invoice and ₹6,024.60 on the second. Invoice totals ₹42,220.40 + ₹39,494.60 = ₹81,715. The racks appear on both invoices but on one HSN line, because the summary groups by code, not by invoice.

How does a wrong HSN code show up?

A wrong HSN code usually shows up as a mismatch between what your invoices say and what your return says. The tax is not lost, but the figures stop agreeing, and mismatches are what invite questions.

• Totals do not agree: the HSN summary in table 12 should add up to the same taxable value and tax as the invoices reported elsewhere in GSTR-1. A line typed by hand, or left out, breaks that.
• Rate does not fit the code: 18% tax on a code the schedule taxes at 5% stands out at once.
• Code is not in the master list: with the dropdown, the portal does not offer it, so the line must be fixed before filing.
• Buyer's records differ: your buyer sees your invoice in their own GST data. If your code is wrong, their records carry the same error.

The fix is almost always at the source. Correct the code on the product so new invoices are right, and ask your CA how to handle invoices already reported in an earlier period.

Where should the HSN code live in your billing software?

The HSN code belongs on the product master, so every invoice line inherits it and nobody types it at the counter. Typing a code on each invoice is where most errors begin: the same product ends up with two codes, and the summary splits into lines that should be one.

In SimpleERP the HSN or SAC code is set on the product and copied to every invoice and bill line. It stays editable on the line for the rare case that needs it. Posting an invoice records the GST with the line's code, and the HSN summary report groups posted lines by code for your GSTR-1 work. The sales register shows each invoice, so you can tell B2B from B2C by the buyer's GSTIN. See GST billing software for the full picture.

A quarterly HSN clean-up keeps table 12 clean

A short review every quarter catches code errors before they reach many returns. Work through this list with the product list and the last quarter's HSN summary open side by side:

• Every product that is sold has an HSN or SAC code; none is blank
• Codes have the right number of digits for your turnover: 4 up to ₹5 crore, 6 above
• Every code exists in the GST master list on the portal
• Products that are the same thing carry the same code
• The rate on each product matches the rate for its code in the current schedule
• The HSN summary totals match the sales register for the same period
• Lines where someone changed the code on the invoice are reviewed and the product fixed if needed
• B2B invoices carry the buyer's GSTIN, so they land in the B2B tab