What is HSN Code in GST? – kavitacomputers.in

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What is HSN code in GST

What is HSN Code ?

HSN (Harmonized System of Nomenclature) is a globally accepted system developed by the World Customs Organization (WCO) to classify goods systematically for taxation and trade.

HSN codes help remove confusion in goods classification and simplify domestic and international trade.
India adopted HSN under GST to maintain global uniformity in taxation.

HSN Worldwide

The HSN system is used by more than 200 countries and economies for reasons such as:

Uniform classification
Base for their Customs tariffs
Collection of international trade statistics

Over 98% of the merchandise in international trade is classified in terms of the HSN.

Harmonized System of Nomenclature number for each commodity is accepted by most of the countries. The HSN number remains same for almost all goods. However, HSN number used in some of the countries varies little, based on the nature of goods classified.

HSN in India

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.

HSN Code Structure in India (8 Digits)

First 2 digits – Chapter Number
Next 2 digits – Heading
Next 2 digits – Sub-heading
Last 2 digits – Tariff Item

Example Breakdown:

HSN Code: 1006 30 10
10 → Chapter (Cereals)
06 → Heading (Rice)
30 → Sub-heading (Semi-milled Rice)
10 → Specific Tariff Item

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Real Examples of HSN Codes

Product	HSN Code	Chapter
Rice	1006	Cereals
Milk	0401	Dairy Products
Mobile Phones	8517	Electrical Machinery
Notebook (Paper)	4820	Paper Products
Shampoo	3305	Cosmetics
Iron & Steel Rods	7214	Iron and Steel

Importance of HSN Code in GST

✔ Helps identify correct GST rate
✔ Reduces classification errors
✔ Simplifies customs procedures
✔ Mandatory in GSTR filing (as applicable)

Turnover-wise HSN Requirement

Turnover below ₹1.5 Crore: HSN generally not mandatory.
₹1.5 Crore – ₹5 Crore: 2-digit HSN required.
Above ₹5 Crore: 4-digit HSN required.
Import/Export: 8-digit HSN mandatory.

HSN vs SAC (Comparison Table)

HSN is used for Goods, while SAC (Service Accounting Code) is used for Services under GST.

Basis	HSN	SAC
Full Form	Harmonized System of Nomenclature	Service Accounting Code
Applicable To	Goods	Services
Digits	8 Digits (India)	6 Digits
Example	1006 – Rice	9983 – Legal Services
Used In	Invoices for Products	Invoices for Services

More abt GST :

https://cleartax.in/s/gst-hsn-lookup

https://services.gst.gov.in/services/searchhsnsac

Download HSN Directory in Excel Format