How to open hsn code in tally?

You can specify and manage HSN codes/SAC and tax rates in TallyPrime at different levels for the goods or services provided by your business. This is a flexibility provided for ease of use to accommodate your business needs.

It is recommended that HSN code/SAC and tax rate should be specified at the same level. In case you have specified these at different levels, you can remove it. If HSN code/SAC and tax rates are specified at stock item level and only HSN code/SAC is specified at accounting ledger/group level, tax will not be calculated while recording the invoice.

Based on your business requirements, you can provide HSN codes and tax rates at different levels.

After defining a tax rate at the company level, if a group of items attracts another rate, specify at the stock group level. For the items in the group, the rate specified at the group level is applicable. After specifying tax rates at the stock group level, if a few items in the group attract a different rate (or the rate set at the company level), override using rate setup at the stock item level. For these items, the rates specified at the stock item level are applicable.

You can specify tax rates at the sales or purchase ledger level, or at the ledger group level. This helps in situations where a special tracking as per the nature of tax is required. Then the rate defined at the ledger level will override the tax rates set at the company, stock group, or stock item levels.

For ease of maintenance and appropriate use of tax rates, specify the rates at the level where you mark the goods as taxable.

A similar order is applicable in the case of HSN codes.

In case you need to specify a separate tax rate for an item in a specific transaction, you can do so, and the rate specified during the transaction will get the highest priority.

Based on your business requirements, you can provide SAC and tax rate at different levels.

After defining a tax rate at the company level, if a few services attract a different rate, specify the rate in the service ledger. For the services, the rates specified at the service ledger level are applicable.

You can specify tax rates at the sales or purchase ledger level, or at the ledger group level. This helps in situations where a special tracking as per the nature of tax is required. Then the rate defined at the ledger level will override the tax rates set at the company level or at the service ledger level.

For ease of maintenance and appropriate use of tax rates, specify the rates at the level where you mark the service as taxable.

A similar order is applicable in the case of SAC.

In case you need to specify a separate tax rate for a service in a specific transaction, you can do so, and the rate given during the transaction will get the highest priority.

There is a new mandate under Notification 78/2020 issued by the GST authority, which is applicable from 1st April 2021.

According to the mandate:

The following table summarizes the HSN Code mandate for businesses:

You can set or update HSN Code in TallyPrime for Stock Items in order to comply with the mandate by the GST authority.

Once saved, the HSN Code appears against the Stock Items in GST Rate Setup as shown below.

If you have set the HSN Code by selecting the Stock Items, then the HSN Code will appear against each Stock Item as shown below.

Similarly, you can update the HSN Codes for other Stock Items.

As a result, the HSN Code will also appear in the print of the Invoice or transaction involving those Stock Items as shown below.

To know how to print invoice with HSN/SAC in TallyPrime, click here.

There may be cases in which you have set the GST Rate and HSN/SAC at the ledger level. In such cases, you may update them in the ledger level itself. And there may also be cases in which you have set GST Rate at the ledger level. However, in transactions involving the ledger, there are Stock Items for which HSN/SAC Codes are not same. In such cases, you can define HSN/SAC at the Stock Item level. So, as a user, you have a flexibility to define GST rate at the ledger level and HSN/SAC at the Stock Item.

Once you set HSN Code in TallyPrime for Stock Items, the same will reflect in HSN/SAC Summary of the GSTR-1 report.

If you have transactions involving those Stock Items for which you have updated HSN Codes and they do not appear here, then change the Period of the report. Press F2 > Enter the From and To dates and press Enter.

Once you set HSN Code in TallyPrime for a Stock Item or a set of Stock Items with common HSN Code and GST Rate, the HSN Code will start reflecting in the transactions involving those Stock Items.

Thereafter, you can file GSTR-1 for the invoices.

To configure this, Go to “Accounts Information” > “Groups” > click on “Create” > Select the “Sales Group” (Select the ledger group for which you want to set up HSN code) > Against “Set/ alter GST details”, enter “Yes” and enter the HSN code here.

• Go to Gateway of Tally > Display > Statutory Reports > GST > GSTR-1 or GSTR-2 .
• Press Enter on HSN Summary in the GSTR-1 or GSTR-2 reports.
• Note: The offline tool does not accept special characters including full stops in the Description of HSN/SAC Summary .

While India has been a member of the WCO since 1971, it only started using the HSN system beginning in 1986. The objective of adopting the HSN system was to categorise commodities for Customs and Central Excise. Later, the Customs and Central Excise added two more digits to the code, making it an eight-digit classification.

Under GST, HSN assists in calculating taxation on each good or service, as the code helps identify the GST rate applicable on a product, along with the volume of the product traded or imported all over the country. With the GST law, the HSN code used is determined by the revenue generated by the taxpayer. Hence, taxpayers whose annual turnover exceeds Rs. 5 crores will use a four-digit HSN code. Similarly, businesses that have a turnover of greater than Rs. 1.5 crore but less than Rs. 5 crores shall use a two-digit HSN code. Lastly, taxpayers with a turnover of less than Rs. 1.5 crore is not required to provide HSN codes. One can find out the list of available HSN codes on the government’s GST website anytime.

Since the implementation of GST, the need to quote the HSN code on products and services depends on the annual turnover of a business in the last financial year.

Here is a step-by-step guide on how to add HSN code in Tally.

Step 1: To add HSN code, go to ‘Company Features.’ Under this, click on ‘Statutory Taxation,’ followed by ‘Set/Alter GST Details.’ Enter ‘Yes’ and input the HSN number.

Step 2: If a particular group of products attracts a different GST rate than the rest of the merchandise, you can add the HSN code for all those products at the Stock Group level. To do so, click on ‘Inventory Information,’ followed by ‘Stock Groups’ then ‘Create.’ Click on ‘Set/Alter GST Details.’ Enter ‘Yes’ and click on the tax rate history option on the right-hand corner. You can now enter the HSN code here.

Step 3: If you want to apply the same HSN code for multiple transactions, you must specify the HSN code at the ledger group level for sales, procurement, expenses, and income groups. This will then show the same HSN code on all the sales invoices.

To do so, go to ‘Accounts Information,’ followed by ‘Groups.’ Under ‘Groups,’ click on ‘Create’ and then the ‘Sales Group’ to choose the ledger group for which you want to set up a single HSN code. Next, click on ‘Set/Alter GST Details,’ enter ‘Yes’ and input the HSN code.

So far, we have looked at how to add HSN code in Tally. We will now have a look at how to change or alter the existing HSN number in Tally.

Step 1: Click on ‘Alt+G’ and then either type or select ‘GST Rate Setup’ and then press ‘Enter.’ Alternatively, you can also click on ‘Gateway of Tally’ followed by going to ‘Display More Reports,’ then ‘GST Reports,’ and then inputting the ‘GST Rate Setup.’ Click on ‘Enter’ once done.

Step 2: If you want to change the HSN code for more than one stock item, you can select the Stock Item or Stock Group by using the Spacebar and Alt+S keys.

Step 3: Once you have selected the Stock Group for which you want to change the HSN code, press the F12 key, followed by setting the Allow HSN/SAC Details to Yes. Once you have entered the new HSN code, press ‘Ctrl+A’ to save the details.

HSN code is one of the most convenient ways by which goods and services can be classified. With the implementation of the GST, it has become even more critical for businesses to provide their products with the correct HSN numbers to avoid any hassles or troubles when it comes to filing taxes. Moreover, just like GST can be integrated into the Tally software, even HSN codes can be done similarly. What’s more, businesses do not need to manually calculate the GST rate applicable to their goods or services. By entering the HSN code, the GST rate applicable will automatically be calculated, in turn, saving time and effort.

Now that you have learned how to add HSN code in Tally, it will become easy for you to compute the taxes on your products just by entering their four, six, eight, or two-digit HSN code, depending upon your annual turnover.

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Ans. To view the summary of the HSN/SAC on Tally, you need to click on ‘Gateway of Tally’ followed by ‘Display More Reports’ then ‘Statutory Reports,’ after which you need to click on ‘GST Reports’ and finally ‘GSTR-1’. Next, press the ‘Enter’ key on HSN Summary, and the summary report will appear on your screen. Alternatively, you can also press the ‘Alt+G’ keys, followed by typing or selecting ‘GSTR-1’ and then ‘Enter.’

Ans. To print an invoice with HSN/SAC in Tally, first press the ‘Ctrl+O’ keys, select ‘GST- Tax Analysis,’ and press the ‘Enter key.' Then, press the ‘Alt+F5’ keys to view the Tax Analysis sheet in a detailed format. Once the Tax Analysis appears, press the ‘Ctrl+P’ keys to print the invoice. To configure the document, press C, click ‘Yes’ if the document's format is correct, and then press P to print out the invoice.

Ans. The HSN/SAC summary document includes details such as the number of vouchers issued in a given period, along with the type of vouchers issued, how the vouchers have been grouped, type of supply, total quantity, total value, product description, tax value, and the different types of taxes levied on the goods and services, along with the tax rates charged on them.

You can specify and manage HSN codes/SAC and tax rates in TallyPrime at different levels for the goods or services provided by your business. This is a flexibility provided for ease of use to accommodate your business needs.

It is recommended that HSN code/SAC and tax rate should be specified at the same level. In case you have specified these at different levels, you can remove it. If HSN code/SAC and tax rates are specified at stock item level and only HSN code/SAC is specified at accounting ledger/group level, tax will not be calculated while recording the invoice.

Based on your business requirements, you can provide HSN codes and tax rates at different levels.

After defining a tax rate at the company level, if a group of items attracts another rate, specify at the stock group level. For the items in the group, the rate specified at the group level is applicable. After specifying tax rates at the stock group level, if a few items in the group attract a different rate (or the rate set at the company level), override using rate setup at the stock item level. For these items, the rates specified at the stock item level are applicable.

You can specify tax rates at the sales or purchase ledger level, or at the ledger group level. This helps in situations where a special tracking as per the nature of tax is required. Then the rate defined at the ledger level will override the tax rates set at the company, stock group, or stock item levels.

For ease of maintenance and appropriate use of tax rates, specify the rates at the level where you mark the goods as taxable.

A similar order is applicable in the case of HSN codes.

In case you need to specify a separate tax rate for an item in a specific transaction, you can do so, and the rate specified during the transaction will get the highest priority.

Based on your business requirements, you can provide SAC and tax rate at different levels.

After defining a tax rate at the company level, if a few services attract a different rate, specify the rate in the service ledger. For the services, the rates specified at the service ledger level are applicable.

You can specify tax rates at the sales or purchase ledger level, or at the ledger group level. This helps in situations where a special tracking as per the nature of tax is required. Then the rate defined at the ledger level will override the tax rates set at the company level or at the service ledger level.

For ease of maintenance and appropriate use of tax rates, specify the rates at the level where you mark the service as taxable.

A similar order is applicable in the case of SAC.

In case you need to specify a separate tax rate for a service in a specific transaction, you can do so, and the rate given during the transaction will get the highest priority.

There is a new mandate under Notification 78/2020 issued by the GST authority, which is applicable from 1st April 2021.

According to the mandate:

The following table summarizes the HSN Code mandate for businesses:

You can set or update HSN Code in TallyPrime for Stock Items in order to comply with the mandate by the GST authority.

Once saved, the HSN Code appears against the Stock Items in GST Rate Setup as shown below.

If you have set the HSN Code by selecting the Stock Items, then the HSN Code will appear against each Stock Item as shown below.

Similarly, you can update the HSN Codes for other Stock Items.

As a result, the HSN Code will also appear in the print of the Invoice or transaction involving those Stock Items as shown below.

To know how to print invoice with HSN/SAC in TallyPrime, click here.

There may be cases in which you have set the GST Rate and HSN/SAC at the ledger level. In such cases, you may update them in the ledger level itself. And there may also be cases in which you have set GST Rate at the ledger level. However, in transactions involving the ledger, there are Stock Items for which HSN/SAC Codes are not same. In such cases, you can define HSN/SAC at the Stock Item level. So, as a user, you have a flexibility to define GST rate at the ledger level and HSN/SAC at the Stock Item.

Once you set HSN Code in TallyPrime for Stock Items, the same will reflect in HSN/SAC Summary of the GSTR-1 report.

If you have transactions involving those Stock Items for which you have updated HSN Codes and they do not appear here, then change the Period of the report. Press F2 > Enter the From and To dates and press Enter.