In today’s digital business landscape, compliance with GST norms is not just mandatory but essential for smooth operations. Among the many aspects of GST compliance, using the correct HSN code for commission is often overlooked, especially by small and mid-sized businesses that deal in brokerage, commission-based sales, or intermediary services.
Whether you’re a sole trader, agency, or business involved in commission-based transactions, applying the commission HSN code correctly on your invoices ensures proper GST filing, transparency, and a professional approach to bookkeeping.
In this blog, we’ll walk you through the step-by-step process of applying the commission HSN code in your invoices using digital tools such as online GST software and accounting management software, especially with the ease of MargBooks.
Understanding the Commission HSN Code
First, let’s break down what the HSN code actually is. HSN stands for Harmonised System of Nomenclature. It’s an internationally accepted system used to classify goods and services. For services, SAC (Services Accounting Code) is used instead of HSN, but in general parlance, many refer to both as HSN codes.
For commission or brokerage services, the relevant SAC is 997159, which falls under Other Support Services n.e.c. This code is applicable for agents, brokers, or intermediaries facilitating deals or sales for a commission.
Using the correct commission HSN code helps:
- Categorise your service properly under GST
- Avoid penalties during audits
- Ensure proper ITC (Input Tax Credit) is passed on to clients
Why Applying the Correct Commission HSN Code Matters?
Incorrect or missing HSN/SAC codes on your invoices can lead to compliance issues. For businesses claiming or passing GST input credits, having the proper code ensures seamless reconciliation.
Some common issues due to incorrect coding include:
- Rejection of GST returns
- Errors in GSTR-1 and GSTR-3B filing
- Mismatch in GST audit or annual return filing
To prevent all of this, businesses are now switching to smarter tools, MargBooks, which simplify GST compliance.
How to Apply the Commission HSN Code in Your Invoices?
Now let’s get to the practical part. Here’s a step-by-step guide to adding the commission HSN code in your GST invoices using modern tools.
1. Identify the Type of Service You Offer
Before anything else, determine whether your commission service is for goods, services, or both. This helps in classifying your SAC code correctly.
For example:
- If you’re a property broker – it falls under 997211
- If you’re a sales agent – it typically falls under 997159
2. Choose a Reliable Online GST Software
To make invoicing easy and error-free, opt for a cloud-based online GST software, MargBooks. Such tools come preloaded with HSN/SAC codes and auto-suggest them based on your service.
Benefits of using MargBooks include:
- Predefined GST templates
- Auto-fetch of GST rates and HSN codes
- GSTR reports without manual effort
3. Set Up Your Services in the Software
Once you log into MargBooks:
- Go to the “Items/Services Master” section
- Add your service details
- Under SAC/HSN Code, enter 997159 (or relevant code)
- Define GST rate (typically 18% for most commission services)
4. Create Your Invoice
Now, create a new invoice for your client:
- Select the client’s GSTIN
- Choose your registered commission service
- The commission HSN code and GST rate will auto-populate
- Add payment terms, remarks if needed, and hit Save/Generate Invoice
That’s it! Your invoice will be fully compliant with GST norms and ready for filing.
Additional Tips for Seamless GST Compliance
Here are a few extra pointers to ensure smooth billing and compliance:
- Use an Accounting Management Software: Integrated tools, MargBooks combine GST billing, accounting, inventory, and return filing everything under one roof.
- Reconcile Monthly: Always cross-verify your GSTR-1 and GSTR-3B data with your invoices.
- Back-Up Data Regularly: Especially if you’re using desktop-based solutions. With cloud-based software, backups are automatic.
- Update GST Rates/HSN Codes: GST rates may change based on government notifications. Stay updated or choose software that auto-updates tax rules.
Why is MargBooks Ideal for Commission-Based Businesses?
MargBooks is not just another online GST software. It’s a full-fledged accounting management software built for Indian businesses. Whether you’re an agent, consultant, or broker, you’ll find features tailored for your needs.
Here’s why users prefer MargBooks:
- Easy-to-use interface for all users no accounting background needed
- Real-time GST reports and filing support
- Mobile access to invoices and ledgers
- Affordable pricing for startups and growing businesses
And yes, it helps you apply the commission HSN code correctly every time!
Final Thoughts
Using the correct commission HSN code is more than a compliance requirement; it reflects your professionalism and ensures accurate GST accounting. With tools like MargBooks, applying HSN codes in invoices becomes a breeze. Plus, with added benefits of integrated accounting, inventory, and tax filing, it saves both time and effort.
Whether you’re just starting or scaling your commission-based business, investing in the right online GST software or accounting management software can be a game-changer.
