HSN code

India is a member of World Customs Organization (WCO) since 1971. It was originally using 6-
digit HSN codes to classify commodities for Customs and Central Excise. Later Customs and
Central Excise added two more digits to make the codes more precise, resulting in an 8 digit
classification. The purpose of HSN codes is to make GST systematic and globally accepted.
HSN codes will remove the need to upload the detailed description of the goods. This will save
time and make filing easier since GST returns are automated.
If a company has turnover up to ₹15 million (US$200,000) in the preceding financial year then
they did not mention the HSN code while supplying goods on invoices. If a company has turnover
more than ₹15 million (US$200,000) but up to ₹50 million (US$660,000), then they need to
mention the first two digits of HSN code while supplying goods on invoices. If turnover
crosses ₹50 million (US$660,000) then they shall mention the first 4 digits of HSN code on
invoices.
The newly-elected McGowan Government in WA had been relying upon a GST payment of 38
cents to the dollar to help return the state budget to surplus by 2019–20 financial year. Although
34 cents in the dollar was an improvement on the 2016–17 rate of approximately 30 cents in the
dollar, the reduction left the state with $241 million less than expected for the 2017–18 state
budget. State treasurer Ben Wyatt called the situation a "joke" and requested a top-up payment
of $226 million, claiming the state was "in the fourth year of what is effectively a domestic
recession". Then-federal treasurer Scott Morrison said he would consider the request for
additional payments. Government senator for WA Dean Smith also weighed in, calling HFE
"terminally diseased".[7]
However, Turnbull again stated that no floor would be introduced until WA's share had been
raised to between 70 and 75 cents to the dollar under the HFE system, [7][9] which was not
projected to occur for at least four years.[7] He added that no change could occur without the
agreement of other states and territories, [9][10] which Premier Mark McGowan claimed was false
given the CGC was a federal body.[9] Crossbench senator for Queensland Pauline Hanson said
she would be happy to support a reduction in Queensland's payments to improve WA's share,
but backtracked when asked to clarify her comments by the Queensland state government. [11]
The GST distribution was expected to become a political issue for the upcoming federal election,
which was due to be held in 2019. [12]
A review of the HFE system by the Productivity Commission was requested by Morrison in April
2017.[13] A draft copy of the report was released in October, recommending that WA's share rise
by $3.2–3.6 billion at the expense of all other state and territory shares. [14] This provoked a
vigorous reaction from South Australian Premier Steven Marshall, who said the state would not
support any change that would reduce South Australia's share. [15]
Morrison directed the Productivity Commission to undertake a second review of the HFE system
in May 2017.[16] Victoria made a submission to the Commission opposing any changes to the
distribution system.[17] The report was handed down in May 2018, and recommended that the
returns should be determined so as to allow for states to provide "a reasonable (rather than the
same) standard" of infrastructure and services.[18] However, the federal government decided to
use the payments made to Victoria and NSW as the benchmark for future payments, offering a
series of top-up payments to WA that would not come from the existing GST pool but from
federal revenue.[19]

Introduction of GST floor[edit]

The federal government announced its final model in July 2018. The plan, which began in 2019–
20, consisted of a floor of 70 cents per dollar in the financial year 2022–23, rising to 75 cents in
the dollar from 2024–25. The federal government would add additional federal funds to the GST
pool to smooth the transition through to 2026–27, to make a "no worse-off guarantee" that no
state or territory would have its share fall during this time. [12] The WA government called the plan
"compensation" for the state's previous low shares, and stated the new formula would ensure its
return to a budget surplus.[20]
At the 2019 federal election, the government campaigned on its GST solution in WA, as many of
the state's sixteen seats were under threat from the opposition. [21]