What Is an HSN Code for GST? An Insider’s Analysis of HSN Code and Its Purpose with GST in India

HSN code refers to the ‘Harmonised System of Nomenclature.” This system was introduced across the world to classify goods systematically. This code is nothing but a uniform code of six digits, classifying five thousand products. The WCO or World Customs Organization developed this code. From 1988 onwards, the HSN code came into action. More than 200 countries have adopted the Harmonized System of Nomenclature number for classification using different tariffs and international trade statistics collection.

How does the HSN Code work?

This code comes with more than five thousand different commodity groups. Every group was identified with a 6-digit code arranged through the legal and logical format.

Also Read: Everything You Need To Know About Jurisdiction of GST State Code List

Importance of HSN

Harmonized System of Nomenclature number is accepted worldwide to classify various products. It becomes easier for HSN Code Finder to identify domestic and foreign trades. You can get a better understanding of both foreign and domestic trade. This code helps the government choose several macroeconomic policies connected to trade practices.

Reasons why HSN is accepted worldwide

The countries accept any HSN Finder for the reasons below.

  1. Accurate classification of different goods
  2. International trade Statistics Collection
  3. Customs tariffs base

A fundamental fact about the HSN is that you can classify more than 98% of the international trade merchandise through HSN.

Also Read: New GST Rates In 2022

HSN in India

Since 1971, India has been a member of the World Customs Organization. For Central Excise and Customs, India has been using the 6-digit code previously. Later the authorities made it an eight-digit classification for creating the codes precisely.

HSN structure has 21 sections, 99 Chapters, around 1,244 headings, and about 5,224 subheadings. Each of the twenty-one sections is classified into chapters, each chapter has Headings, and each heading has been divided into Sub-headings. The Section and Chapter titles present the broad categories, whereas the headings and subheadings have detailed descriptions of the products. 

The connection between GST and HSN

For those dealing in import and export businesses, having an eight-digit HSN under GST for all the goods is essential.

Chapter: Under the HSN module, there are 99 chapters.

Heading: 1244 headings are there under these 99 chapters.

Subheading: A total of 5224 subheadings are there under the Headings.

As per WCO guidelines, the first six digits of HSN must remain the same while the rest of the numbers can change. It is so because they include both the National and Regional tariffs, and customs authorities may change them if required at times.

Also Read: All About GST, GST Full Form & Meaning, Types Of GST In India – What Is CGST, SGST, And IGST?

Definition of HSN Code for GST

Previously, only Central Excise and Customs needed HSN codes. But as soon as the GST implementation happened, every business and company had to mention HSN codes in their invoice. Look at the HSN digits and GST turnover that you need to write.

  • If your company or business turnover is less than Rs 1.5 crore, you do not need any code
  • If your business turnover is between 1.5 crore to 5 crore, you have to mention the code up to 2 digits.
  • If your turnover is higher than five crores, all you need is to add the code to 4 digits

From the CEC regime in India, HSN classification was always applicable. But after GST, it turned into more detail. HSN has become eight digits now. 

Also Read: GSTIN: What Is GSTIN Number? – Check & Verify GSTIN/UIN Number Online?

SAC or Services Accounting Code in GST

Like goods, services have their classifications, depending on measurement, taxation, and recognition. SAC refers to the Codes for services.

GST HSN Finder: How to find HSN Tax Rates

Follow the steps you need to get the HSN code for GST.

Step 1: Go to the homepage of the GST portal, and enter the login ID and password.

Step 2: Click’ Services’. Go to User Services and find HSN/SAC code. Click the HSN checkbox.

Step 3: Select the tax type from the drop-down list 

Step 4: Enter the HSN code or name of the chapter you want to check the rates for

Step 5: Under the HSN Search category, add the HSN code for goods. Choose the dates from the category of Effective Period.

Step 6: As soon as you fill up all the required details, click Search.

The process is the same when you have to determine SAC tax rates.

Importance of HSN code for GST

You may keep wondering why it is essential to have the six or eight-digit code under GST.

HSN is important to make the Goods and Services Tax worldwide accepted and systematic. When you have the HSN code for GST, you won’t have to upload a detailed goods description. It is time-saving, but it also makes the process of filing easier due to the automated GST returns.

A service provider should provide an HSN sales summary if the turnover is around the above-mentioned slabs.

Also Read: GST Return – What Is GST Return? Who Should File, Due Dates & Types Of GST Returns?

HSN Code List for a variety of products

SectionsHSN Code List 
Section 1Live animals and products derived from Animals
Section 2Vegetable products
Section 3Vegetable and animal Fats and Oils, cleavage products, Animal and Vegetable waxes, prepared edible fats
Section 4Beverages, Tobacco, Manufactured Substitutes from Tobacco, Prepared Foodstuffs, Spirits and Vinegar
Section 5Mineral Products
Section 6Chemical products and the allied Industries
Section 7Plastics, Rubber and articles made out of them
Section 8Leather, handbags, Fur skins and articles, Raw hides and skins, saddler, harness, travel accessories, containers like handbags, products made from animal gut (only silk-worm gut is not included)
Section 9Wood, wood articles, Wickerwork, Wood charcoal, Cork and cork articles, straw Manufacturers, Plaiting Materials, and Basketwork
Section 10Wood pulp, other Fibrous Cellulosic Material, Recovered paperboards (waste and scrap) and paper, and their articles
Section 11Textile and textile articles
Section 12Riding-crops and parts, Headgear, Sun Umbrellas, Articles made from human hair Walking-sticks, seat-sticks, Umbrellas, Footwear, whips, prepared feathers and their articles, Artificial flowers
Section 13Stone articles, plaster goods, glass and glassware, asbestos, mica, or some other materials, cement, ceramic products
Section 14Natural pearls or cultured ones, valuable metals, Metal clad with precious metal, and articles, Imitation Jewelry, Coins, Precious and semi-precious stones,
Section 15Base Metals and articles
Section 16Machinery appliances, souch recorders and reproducers, electrical equipment and their parts, sound recorders, television image, mechanical appliances, and accessories
Section 17Vessels, Vehicles, Associated Transport Equipment, and Aircraft
Section 18Clocks and watches, Cinematographic, measuring, Photographic, checking, medical or surgical instruments and apparatus, musical instruments, Optical, precision, and their accessories
Section 19Arms, ammunition, and their parts
Section 20Manufactured Articles, Miscellaneous
Section 21Artworks, antiques, and Collectors’ Pieces