CBIC Clarifies: No Mandatory HSN Code Requirement in GSTR-1 for B2C Transactions for Taxpayers with Turnover Up to ₹5 Crore
The CBIC has provided significant relief to small and medium taxpayers by clarifying that the inclusion of HSN codes in GSTR-1 for B2C (Business-to-Consumer) transactions is optional for registered persons with an aggregate turnover of up to ₹5 crore in the previous financial year. This clarification aligns with the provisions of Notification No. 12/2017-Central Tax dated 28th June 2017 (as amended).
Background: HSN Code Requirements Under GST
As per Notification No. 12/2017-Central Tax, amended on 15th Oct. 2020 by Notification No. 78/2020 – Central Tax, taxpayers with an aggregate turnover of up to ₹5 crore in the previous financial year are exempt from mentioning the HSN code in tax invoices issued for supplies made to unregistered persons (B2C transactions). This exemption was introduced to reduce the compliance burden on small taxpayers, who often deal with retail consumers.
However, for Business-to-Business (B2B) transactions, the requirement to include HSN codes in invoices and reporting in GSTR1 remains mandatory. Read CBDT vide Notification No. 78/2020.
GSTN Advisory: Bifurcation of Table 12 in GSTR-1
On 1st May 2025, GSTN issued an advisory announcing changes to the structure of GSTR-1/1A. GSTR1/1A are the return form used by taxpayers to report outward supplies. Table 12 of GSTR-1, which captures the HSN summary of outward supplies, has now been bifurcated into two separate tabs: “B2B Supplies” and “B2C Supplies.” Also said, Taxpayers need to enter HSN summary details of B2B Supplies and B2C Supplies separately under respective tab. Certain validations have been introduced to match the HSN wise value declared in Table 12 with the values declared in other tables of the return.
Upon concerns raised by stakeholders CBIC clarifies through its official tweeter handler that, “The system has not made the B2C table mandatory i.e., system allows the HSN summary to be entered any value/ can be left blank by a taxpayer having aggregate turnover upto Rs. 5 crore in the previous Financial Year.”
Conclusion
The CBIC’s clarification, with the GSTN advisory is a welcome step for small taxpayers, offering flexibility in GSTR-1 filing for B2C transactions. Taxpayers should leverage this exemption to streamline their invoicing processes. But remain compliant about mandatory requirements for B2B supplies to ensure compliance with GST regulations.
