Accountants! Carefully enter the HSN code for e-way bill

e-Way bill and HSN code error

e-Way Bill Catch it easily

Another one of the GST Regime’s statutory compliance is the Electronic Way-Bill System. Implemented for all Businesses form April 2018, the e-Way Bill has helped the Government immensely is making Businesses more & more inclined towards GST Compliance.

e-Way Bill is a mandatory document, generally generated by the owner or the supplier of the goods & essentially carried by the transporter of the goods.

E Way Bill generation is mandatory for all types of businesses, goods & types of movements of the consignment, given that the value of the goods being carried must be Rs. 50,000 & more.

e-Way Bills are mandatory for both intra-state & inter-state movements and also for SEZ & import/export movements as well. There is a list of essential & precious goods that are exempted from e-Way Bills given by CBIC, other than that, the e-Way Bill must be carried for all the goods.

Non-Compliance with the e-Way Bill Rule can levy penalties, scrutiny & even confiscation of the goods found in such conditions. Both monetary & non-monetary implications of non-compliance with the e-Way Bill is a persuasive step to make Businesses comply better with GST & its rules.

e-Way Bills are generated against Invoices as a supportive document for transportation purposes. It is made of 2 Parts. Part A- that consists of the import Invoice details such as GSTIN of the receiver, their address, Item details like the value of items, HSN Codes, item quantity, taxes, etc.

And Part-B contains the important transporter details, such as transportation mode, transporter Id & vehicle number.

All the details must be accurately inserted in the e-Way Bill, as e-Way Bill once generated cannot be rectified or changed. The user has to cancel the error-prone e-Way Bill & create a new one with the right details.

What is HSN Code? Why it is so important in e-Way Bills?

HSN is the system of naming goods to make the identification & categorization process more systematic & simpler even for a vast variety of products & services.

The Harmonized System of Nomenclature of Goods, is the system of classifying goods in a hierarchy based & logical manner. The HSN is adopted uniformly PAN INDIA. Meaning the HSNs are accepted in the same pattern & manner across the whole country.

The HSN Code is a 6-8 digit code, these codes systematically classify around 5,000 different goods & commodities. The HSN is an internationally accepted System & hence facilitates International Trade as well.

Unlike the previous system, where different states had different code systems for products & goods. The HSN brings uniformity to the classification of goods & avoids confusion caused by multiple coding systems of different states.

The current GST HSN Codes consist of 8-digits assigned to organized goods & the GST Rates are then calculated accordingly. This is one big feature of HSN Codes.

This feature of the HSN Code increases its value in the GST system, that it is used as a base for deciding the GST Rate of the goods. The HSN Code is used in Invoices, e-Way Bills as well as in GST Filing.

When a taxpayer enters the HSN Code in their filing, the GST System automatically calculates the tax liability based on the Tax rate slab under which that HSN falls.

Feeding wrong HSN Codes to any of these important documents can be problematic for the Accountant & the taxpayers. The goods are classified on the basis of HSN Codes, any error in entering the HSN Code can change the tax liability slab of the good & may create friction for the Business.

Incorrect HSN code? Know how it impacts Invoices & GST Returns
HSN Error in E-way bill

The HSN codes must match flawlessly in the reconciliation of e-Way Bills, Invoices & the GSTReturns filed. Any careless error in the matching of the HSN Codes can create trouble & confusion in calculating the Taxable amount & the Tax liability.

This will eventually lead the Taxpayer towards serious consequences including Penalties & Scrutiny.

Incorrect HSN Codes can be a potential problem for Buyers. If a supplier enters the wrong HSN Code, the GST Rates for goods change. Upon this, the Buyer shall not be able to claim ITC due to the mismatch in reconciliation.

HSN Code error is also a threat to the Supplier themselves. since the System automatically fetches the GST Rate & thus the Tax liability based on the HSN code. Any error in the HSN Code can change the Tax liability, which has serious consequences especially Notices & Scrutiny.

This can be a potential problem for e-Way Bills. As the e-way bill data needs to be matched with the GSTR-1 data, such errors can cause mismatches in the report.

For a smooth filing of GST returns the e-Way Bills, Invoices & Return Filing must work in harmony. In such a case, a mismatch would not help to make things better. And taxpayers must ensure to avoid errors like these & be very careful while entering any data in their Filings.

Penalties on wrong e-way bills

Non-compliance with any provision of the e-Way Bills or flawed generation of the e-Way Bill under the CGST rule can levy a penalty of Rs. 10,000 or the amount of tax sought to be evaded.

Although the Government has been very lenient on small e-Way Bill errors such as spelling mistakes, minor errors in HSN, PIN codes & addresses. To ensure that this leniency is not being misused or taken for granted the Government studies the cases before actually taking action.

No penalty or actions shall be taken if the first 2 digits of the 4-8 level of HSN code are correct & the Tax rates are mentioned accurately.

Since the Tax Rates are calculated on the basis of the HSN, a change in the HSN shall result in the change in Tax Rate & eventually the Tax liability shall change too, this is a type of dodging of taxes & hence some action needs to be taken.

So, in case the officials find out that the errors have been made by the Taxpayer on purpose as part of a conspiracy plan to evade tax or falsely supply goods, then the officials can take strict actions under the CGST Rule.

The Goods can be seized, detained & confiscated. In such cases, not just the Supplier but the Transporter & Receiver can be penalized also under the provisions of the same Act.

Here is an Illustration to understand this better, a taxpayer creates an e-Way Bill & enters a wrong HSN Code, & wrong Tax rate to dodge or reduce the Tax liability.

On being caught in an interception, he claims that it was a data entry error, this arises suspicion & the officials can examine the e-Way Bill closely, & levy penalties & scrutiny on the taxpayer for not complying with all the provisions of the e-Way Bill Rule.

Their goods can be detained & confiscated as a result of non-compliance.

How to accurately feed HSN Codes to your e-Way Bills

Compliance with GST & its branches such as the e-Way Bill system is still a nightmare for many Businesses. Taxpayers find it difficult to comply with such minute details & preciseness.

Even though, there are other technology-driven solutions that can help Businesses in the context. APIs & site-to-site integration is an excellent solution for Businesses

And one such API solution provider is GSTHero. GSTHero is a GST Suvidha Provider authorized by the Government of India, that provides the most relevant & accurate solutions for overall GST, e-Way Bill, e-Invoicing, & Reconciliation complications.

Enter correct HSN codes with GSTHero- GSTHero’s smart solution recognizes if there is an issue with the HSN Code & indicates the error. The solution then displays all the HSN Codes used by the user in that e-Way Bill.

This simplifies the work up to a huge extent, a. the error is pointed out, which normal ERPs cannot do & b. Suggestions to identify the wrong HSN are given in a NotePad making the work short & simple for the user since they now only need to check which HSN Code looks odd.

Never enter wrong HSN Codes in your e-Way Bills with GSTHero’s e-Way Bill solutions. Listed are other features of the Integrated Solution-

1. Generate e-Way Bills quicker & easier- save your time & avoid extra efforts on one single task

2. Short- The process is shortened to a few steps with GSTHero, no juggling between the ERP & the Portal. Its all emerged in one, with GSTHero Integration

3. Say No to JSON Files- No more use of JSON files with the ERP plug-in or Integration. The process becomes more direct & extra steps are omitted.

4. No manual data entry- The process becomes automated & digital completely, the required data can be furnished in just 1 click

5. Accuracy for easier Compliance- GST Compliance can be tough, but we tried to ease it up a little. You can comply better with accuracy in each & every branch of GST, e-Way Bills included. No manual process means more accuracy.

6. Excellent After-Sales Support- GSTHero’s dedicated team is there by the clients’ side at all times to provide the best after-sales training & support.




GST Small Business Accounting

10 Accounting Mistakes Businesses must strictly avoid for accurate GST Filing

GST Return Filing

It has been over two years since the implementation of the New Goods & Service Tax Regime. And the GST regime has effortlessly taken over the former VAT & Service Tax system.

The GST System has eliminated the Cascading effect or the tax on tax effect on goods & services thus decreasing the costs of Goods & Services.

The GST System has also introduced various advantageous rules & relieves such as

  • The Composition Scheme for Small Businesses
  • Elimination of the Cascading Effect
  • Automating the Filing process online- Digitalization
  • Simpler Compliance
  • Improvements in Logistics
  • Systematization of the unregulated Sectors such as the E-Commerce
  • Input Tax Credit

In other words, the GST system was introduced to make the Indirect Taxation more efficient & sophisticated both for the Business as well as for the Government.

However, just like no system is perfect, the GST Regime has also faced backlash due to its not so effective implementation & the flaws in the system.

Out of the lot, the most basic issues faced by Taxpayers still remain Compliance. The former VAT system allowed the Taxpayers to rectify any errors while filing their Returns. The GST System does not provide any such facilities to the Taxpayer.

If a certain Return is wrongly filed there is no chance the Taxpayer can modify the returns until the next Filing. In the meantime, the Taxpayer shall receive a Notice & maybe even penalties.

Hence it becomes crucial for Businesses to comply with the GST System & file accurate taxes, not just for the sake of compliance but also for the Business.

A well-prepared Tax return helps the Business track their growth & progress. It helps the Business to learn the exact numbers of Inward & outward supplies and on that basis, they can understand the cash flow cycle.

An accurate GST Filing also ensures an accurate amount of Input Tax Credit Claim. ITC is an indirect form of cash inflow for Business & saves them from paying double taxes.

The Taxpayer must take the precision of the GST Return Filing into utter consideration & make sure to avoid errors, as errors in the filing cannot be rectified once submitted.

But Tax filing cannot always be accurate since the filing needs to be done manually some errors may still occur. The GST Norms are complicated & the Taxpayer may miss out on something or the other, such as missing records like invoices, or wrong entering wrong GSTINs, etc.

We have identified & stated The Most Common Mistakes Taxpayers Make & Must Avoid while filing their Returns-

GST Return Filing Mistakes To Avoid

 1. Manual Data entry errors– This is the most basic mistake in GST Return Filing & the one that should essentially be avoided. The taxpayer must ensure the details are entered correctly & in the right format, such as the date format, non-repetition of Invoice numbers, correct Invoice values & value format, correct counterparty GSTINs & Supply address, etc. The special characters must be used wisely by the taxpayer only where required.

2. Tax Slab Compliance– The taxpayers must ensure that the tax rates of the items are calculated as per the Tax Slabs given by the GSTN & the HSN summary must be calculated accordingly. Currently, there are 5 tax slabs- 0%, 5%, 12%, 18%, & 28%.

3. Non Filing of the NIL Returns– Taxpayers usually feel that since they had no transactions for a particular tax period, they don’t need to file their GST Returns. This is a misconception, even in case of zero transactions, Businesses must file a nil return.

4. Reverse charge Mechanism– The Supplier taxpayers must thoroughly understand the Reverse Charge Mechanism under GST. Under Reverse Charge, the Buyer pays the Tax for purchased goods directly to the Government. In normal cases, the Buyer pays this tax to the Supplier who then pays it to the Government. While filing their GST Returns the supplier must understand if they fall into the RCM category & file the Returns accordingly to avoid double tax payment. There may also be cases where the RCM is ignored even for eligible transactions. This practice is incorrect & must be avoided

5. Confusing Zero-rated Supply with Nil-rated Supply– Yet another common concern is the confusion in Zero-rated supplies & Nil-rated supplies. Goods & services with 0% applicable GST is Nil rated Supply, whereas, exported goods & supplies to SEZs are Zero-rated supplies. The taxpayers must categorize the supplies carefully & accordingly.

6. ITC Reversal & Credit Blockage– As per the various amendments in the ITC laws, the ITC shall be reversed in situations like ITC on goods used for personal use, lost or destroyed goods, non-payment to the supplier within 180 days, sold capital goods, & samples, etc. Also, there are certain goods for which the Credit is blocked. Taxpayers must keep in mind the ITC laws while filing & claiming ITC.

7. Paying Taxes under the wrong GST head– There are GST heads such as CGST, SGST, IGST, etc. The payment of taxes under the wrong GST Head can invite trouble for the Taxpayer. The CGSTs must be paid under the CGST head only.

8. Mismatch of monthly/quarterly filing with Annual Returns– The taxpayer must file accurate GSTR-1, GSTR-3B, & GSTR-9. The mismatch in the three reports can cause the taxpayer to receive notices. The GSTN is highly dynamic about the same & does not tolerate even the slightest mismatching of even negligible amount. Hence the taxpayers must be highly cautious while filing these returns.

Mismatch in GSTR1, GSTR3b and GSTR9

9. E-WayBill Compliance – The taxpayer must comply with the E-WayBill system since the GSTN has announced the reconciliation of the      GSTR- 1 & E-WayBill data. Hence the taxpayer must file their GSTR-1 accurately concerning the e-WayBills & vice versa.

10. Precise ITC claim – The taxpayer must thoroughly cross-verify their auto-populated GSTR-2A, Purchase books & GSTR-3B & claim the correct value of ITC. Since return once filed cannot be rectified or changed until the next filing. The delay caused due to the error can attract notices, fines & penalties. The taxpayer must keep in mind to claim only the accurate value of ITC in their filing to avoid concussions. That is, the taxpayer must know, how to claim input tax credit in gst

To conclude, it is advisable to the taxpayer that they must take their time & file accurate GST returns, to track the exact Business progress & to comply with the GST system to dodge Notices, Scrutiny, Late fees, fines & penalties.

GSTR Filings can be done accurately using APIs & Integrations of the billing systems with software solution providers such as GSTHero Software Solutions.


How GST-Cloud accounting software increase your small business productivity.

How GST-Cloud accounting software increase your small business productivity.

Financial management is the comprehensive tracking of all income and expenses and it is the pivot on which every business revolves. While every business needs an accurate financial management to grow, ensuring that that task is undertaken by a system is that is capable and efficient is of the utmost importance. It’s no longer a secret that humans are susceptible to errors and the slightest one that goes unnoticed can cost any business a great deal of money as well as goodwill. Business accounting software makes the process of financial management a lot easier and more accurate. While there are a range of small business accounting software aswell as free online accounting software, some are considered to be in a league of their own. A prime example is the GST-Cloud accounting software whose algorithms and programming has been designed to spot any mistakes on the path of the user aswell as provide instant suggestions to rectify them.

A lot of businesses are turning their attention to the GST-Cloud accounting software to increase their productivity and efficiency due to its extensive range of functions. Some include

Oversight functions over your Business finance

The GST-cloud accounting software oversees all accounts associated with your business – accounts payable, accounts receivable as well as ledger accounts. Its has been programmed to provide the business owner with the clear overview of the company’s financial position.

Analyses the performance of your business

A small business needs constant examinations in order to ensure that its activities are right on track to achieve its goals and objectives. While individuals as wells as low-build softwares may miss a little detail, the GST-cloud accounting software is always spot on and it helps the manager take informed decisions in vis-à-vis the financial records provided by the software.

Easy to use- anywhere and anytime

Having a staff or personnel manage your business has a disadvantage because their activities are always limited to when they are onsite. Same applies to traditional accounting software that faces a list of problems that includes;

  • Lack of updated data in the system as well as the software itself
  • Only works on a computer and the data is transferred from one place to another e.g. the data can be transferred from the computer to a flash drive making it susceptible to malware and viruses.
  • Limited user – this restricts key personnel from keeping tabs with the latest financial records and details of customers.
  • Backups are usually costly and complicated to keep.
  • Frequent upgrade of the software is usually difficult, time consuming and quite costly

GST-cloud accounting software remains a cost efficient and super easy way to increase the productivity of your business because it can be managed from any device – tablets, smartphones and computers with an active internet. It provides a detailed and more organized way of staying connected to your business at all times. GST-cloud accounting software also serve as a QuickBooks alternative because it flexible, cost efficient and ultimately easy to use.

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How to claim ITC(Input tax credit) in GST

How to claim ITC in GST

Input tax credit (ITC) is one of the most prominent features of the newly introduced GST tax system in India. ITC gives registered taxable businesses the benefit of reduced taxation. This is because the tax they pay on sales is reduced as a result of the tax they have already paid on purchases.

Though the concept of ITC has been in existence even before the introduction of GST, it has been modified. It is now possible to claim input tax credit for central sales tax and since all the various forms of tax are now subsumed under GST, it is possible to cross-credit one tax to the other especially for IGST. For instance, you can utilize the credit you get from paying VAT on other forms of tax, say luxury tax.

To reduce your tax liability and keep your business floating, it is important to take advantage of ITC. However, there are certain conditions that you must meet to claim your ITC.

Rules to follow to Claim your ITC

  1. Both you and your supplier must be registered taxable persons.
  2. You must possess a valid tax invoice, debit note, bill of entry, bill of supply and other prescribed document.
  3. You must have received the goods or service.
  4. Your supplier has paid the tax charged on the goods or services to the government.
  5. The supplier has filed GST return on the supply.
  6. If the goods are in instalment, the credit will be paid only when the last instalment is paid.
  7. You must pay the consideration for the supply received within 180 days to enjoy input tax credit otherwise any ITC paid shall be added to your output tax liability with interest.
  8. You can claim input tax credit on taxable exports or zero-rated supply goods.

Other Points to Note in Order to Claim ITC

  • You cannot use ITC on SGST paid in one state to pay for SGST in another state.
  • You cannot claim ITC for goods you purchase for personal consumption or without the intention of reselling.
  • Taxpayers who are beneficiaries of composition scheme cannot enjoy ITC.
  • A bank or any non-banking financial institution can claim ITC proportionate credit or 50% of the eligible tax credit.
  • Your GSTR-3 return must match with your supplier’s GSTR-3 return for you to claim ITC, as any mismatch due to duplication or excess input declaration on the part of the recipient, then the excess input will be considered as output liability for the recipient, which shall be paid with interest. To ensure accuracy in your invoice or carry out sales and purchase reconciliation, consider utilising online accounting software.
  • For newly registered taxpayers, those that changed from composition dealers to normal dealers and from exempt to taxable supplies, they cannot avail ITC after one year of the date of issuance of tax invoice relating to such supply.

You must know that to claim your ITC, the input tax must be paid through the Electronic Cash/Credit Ledger. Therefore, you can credit your ITC in your electronic credit ledger and utilize it later.

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Impacts Of GST On The Indian Economy

Impacts Of The GST On The Indian Economy

Small business accounting software have been considered effective by businesses in India. We are also witnessing an exodus towards the GST accounting software due to the new tax reforms. A good online accounting software must be able to eliminate the difficulty experienced in integrating business accounts. GST India accounting software has been considered by economic experts as a great Quickbooks alternative. There are several impacts of the Goods and Sales Tax on the Indian economy and they are as follows;

  1. E-Commerce and Online Marketplaces

Tax collected at source (TCS) will be collected by online stores like Amazon and Flipkart at a fixed rate of 1% and this amount will be paid to sellers on their site. This will make online shopping costlier.

  1. Increased production and Reduction of Tax Burden

The previous structure of taxation galvanized with numerous tax clauses, obstructed producers from manufacturing at their optimum capability and stifled growth. GST efficiently takes care of this challenge by providing tax credit to the producers.

  1. Elimination of undue storage expenses

A number of tax barriers like toll plazas and check posts often results in the wastage of unpreserved and perishable items in transit. This resulted in an increase in costs due to the increasing needs of buffer stock and the cost of storage. A solitary taxation system like GST expels the disadvantages of this roadblock.

  1. Growth in Real estate

Due to the inputs credit benefits that most builders stand to get under the new tax structure, raw materials will be available at a reduced price. Major players in real estate like Quikr and Proptiger are looking to pass this cost advantage to property buyers.

  1. Transparency and accountability

The GST promises more transparency and accountability in the system because the tax payers will know the exact amount of taxes levied on them and on what bases are they being charged.

  1. Increased government revenues

GST serves as an alternative source of income for the government through a means of extending the tax base.

  1. Credit facilities

GST provides credit for the taxes paid by manufacturers in the production chain. This will serve as an encouragement for producers to purchase raw materials from different certified dealers. The potential effect of this is that more suppliers and vendors will be enticed and brought in under the scope of an affordable taxation.

  1. Elimination of export custom duties

GST directly affects the Indian economy by expelling the custom duties applicable to exports. The country’s competitiveness in the global markets will rise based on the lower cost of transaction.

  1. Long run economic benefits

The merger of Central and State taxes into a single tax expects GST to significantly improve the Indian economy by eliminating the stress of double taxation and making it easy for industries.

Final Words

Despite the economic challenges faced by even the world’s biggest economies, India has thrown the hat in the ring by embarking on a couple of strategic plans to fortify and bolster its economy. The Goods and Service Tax (GST) is one of the undertakings of the Indian economy that is supposed to stimulate the much desired economic growth by transforming the previous indirect taxation towards the uninhibited flow of goods and services.

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Understand GST with these 25 Frequently Asked Questions (FAQ)

Understand GST with these 25 Frequently Asked Questions (FAQ)

Question 1: What is GST?

Answer: GST simply means Goods and Service Tax. It is a destination-based tax on consumption of goods and services in India.

Question 2: What is place of supply in GST?

The place of supply or place of consumption is what determines whom the tax is accrued to.

Question 3: Who bears the burden of GST?

The tax burden is borne by the final consumer. GST is in the form of an indirect tax on the supply of goods and services.

Question 4: Which tax does the GST subsume?

The dual GST subsumes the taxes and levies on items previously collected by the central and the state. It will be levied simultaneously both by the central, in the form of intra-state supply of goods (CGST) and the state (SGST/UGST). The tax levied by the central on the inter-state supply of goods and services is called Integrated GST (IGST).

Question 5: What are the exempted items under GST?

All formerly taxable items by the central and the state are taxable except alcohol, petrol and petroleum products, electricity and real estate.

Question 6: How can I register my business with GST?

Go to the GST website on any of your devices and do the registration.

Question 7: What is GSTIN?

GSTIN is the identification number given to every registered supplier.

Question 8: Can I register multiple businesses under one GSTIN?

Yes. It is possible to register multiple businesses under the same GSTIN as long as they are in the same state.

Question 9: Do e-commerce suppliers pay GST?

Yes. An electronic commerce operator is mandated to register for and pay GST irrespective of the value of the supply made by them.

Question 10: What are the various forms of returns on GST?

The returns are varied from GSTR-1 to GSTR-11.

Question 11: When is the GST filing return due?

The due date for filing return is based on the form of GST return a taxpayer subscribes to.

Question 12: In what way does one get penalized for non-filing or late filing?

You pay a late fee of Rs. 100 for every day of delay after the due date to a maximum of five thousand Rupees. Refusal to file attracts a penalty ranging from 10% of the tax not paid or ten thousand Rupees.

Question 13: What is composition scheme?

This is a scheme under GST, which allows small taxpayers whose turnover is less than Rs.1.0 crore to pay tax at a fixed rate of turnover.

Question 14: How does GST benefit small business?

GST makes tax filing convenient for small businesses. It also gives better Input Tax Credits (ITC) and makes inter and intra state tax filing uniform.

Question 15: As a small business owner, do I need accounting software for my GST filing?

Yes. You need small business accounting software for easy tax filing and access to GTN.

Question 16: How does online accounting software benefit small business?

It becomes easy to input and collates your invoice with accounting software. Accounting software also calculates the tax payable on each supply for you and tax return filing becomes automated.

Question 17: Will the department be able to read my accounting software?


Question 18: What is ITC?

Input tax credit is a means of reducing the tax liability by lowering taxes paid on inputs from taxes paid on output.

Question 19: Do taxpayers who benefit from the composition scheme enjoy ITC?


Question 20: What is HSN and SAC code?

HSN refers to Harmonized System of Nomenclature. It is an 8-digit code use to classify the amount taxable on different goods. Service accounting code (SAC) is used to classify services.

Question 21: What is the reverse charge mechanism?

This is a case where the recipient of goods and services is liable to pay the tax instead of the supplier.

Question 22: Does the reverse charge applicable to only goods?

No. the reverse charge applies to both goods and services

Question 23: What is PAN?

PAN simply means Permanent Account Number. This is required for anyone to register for GST except the non-resident taxable person.

Question 24: Who is a non-resident taxable person?

A person residing outside India but making a taxable supply in India is a non-resident taxable person.

Question 25: Can I cancel my GST registration?

Yes. However, you must meet certain conditions to discontinue using GST.