HSN refers to Harmonized System of Nomenclature code and is used for classifying the goods under GST. It is an internationally accepted product coding system created under General Agreement on Tariffs and Trade (GATT).
Use Tally for Accounting, ClearTax for GST
Under GST Act,requirement of quoting the HSN codes in the invoices depends upon the turnover of the business in the preceding financial year.Below table will help you understand in detail.
Turnover Criteria for Quoting HSN codes
| Turnover of the business in preceding financial year | No of digits of HSN code required |
| Less than 1.5 crores | Not required |
| Between 1.5 crores to 5 crores | First 2 digits |
| Above 5 crores | First 4 digits |
| For Import- Export | 8 digits |
In this article,we will explain you how to configure HSN codes in Tally ERP 9 Release 6.
You can enter the HSN codes in Tally ERP 9 at various levels in the following manner :
- Company Level
If you have the same HSN for all the goods and services, then all you need to do is simply set these values at the Company level once and it will get quoted in your invoices for all the goods & services you deal in.
To configure this ,Go to Company Features > Statutory & Taxation > Set/alter GST details > Enter yes . Enter HSN code applicable for the company here.
- Stock Group Level
If a specific group of items attract a different rate,then you can also configure the HSN at the Stock Group level. The rate specified at the group level is applicable to all the items in that group.
To configure this, Go to Inventory Information > Stock Groups > Create > Set alter GST details >Enter Yes > Click Tax rate history button on the right side. Enter HSN Code here.
- Stock Item Level
If few items in a stock group attract a different rate, then set up HSN code at the stock item level for those stock items. This will override the rates specified at the stock group level.For instance you have 5 Stock items say item A,B,C,D and E under same stock group.Item D and E has different HSN code from A,B and C.Then you can specify different HSN code for item D and E at stock item level.
To configure this, Go to Inventory Information > Stock Item > Create > Set alter GST details > Enter yes >Click Tax rate history button on the right side > Enter HSN code here.
- Ledger Group Level
If you would like to apply the same HSN for different type of transactions, you can specify HSN at ledger group level for Sales, Purchase, Expense and Income groups.For instance you are selling the goods on which same HSN is applicable, then you can configure the HSN code at the sales level.It will show the same HSN on all sales invoice.
To configure this, Go to Accounts Information > Groups > Create > Sales Group(Select the ledger group for which you want to set up HSN code) > Set alter GST details > Enter Yes > Enter HSN code here.
In this way, you can create HSN codes in Tally at the various levels applicable to you.
In case you want assistance in filing GST returns ,then you can use ClearTax GST. It easily integrates with Tally, Excel & other accounting software. You can import invoice level data for Sales & Purchase in the cleartax software and then it will calculate the data points to be filled on various GSTR forms. It automatically populates a lot of data to make sure the return is error free.You can also easily create purchase invoice using Cleartax Billbook. Also read our article on How to Record, View & Bulk Import Invoices?
To know more, read our article on Tally ERP 9 Solutions Integration with ClearTax GST.
Also read our article on How to create sales invoice in Tally ERP 9 Release 6 under GST and How to create purchase invoice in Tally ERP 9 Release 6 under GST.