What is HSN Code
HSN stands for ‘Harmonized System Nomenclature’. The WCO (World Customs Organization) developed It is a multipurpose international product nomenclature that first came into effect in 1988 with the vision of systematically facilitating the classification of goods all over the World.
How do HSN Work
India has been a WCO (World Customs Organization) member since 1971. It employed six-digit HSN codes to classify merchandise for Customs and Central Excise duties. The Customs and Central Excise authorities added two more digits to make the codes more precise. This resulted in an eight-digit HSN classification.
Almost all goods and services in India are classified using the HSN classification code, which facilitates calculations of the Goods and Service Tax (GST).
Structure of HSN Code
The structure of HSN code Comprises of 21 groups, and further, these groups are classified into 99 chapters. I then divided the chapters into headings that are about 1244 in number. The headings are subsequently divided into 5224 subheadings. In the code itself, this plays out in the following manner:
- Each Chapter is named as a two-digit HSN number.
- Each two-digit HSN number is sub-classified into a four-digit HSN code.
- Later, such four-digit HSN codes are further sub-classified into the six-digit HSN code.
What Is the Significance of the HSN Code?
Because the HSN Code is a globally recognised product classification standard, it reasonably identifies commodities for domestic and international trade. It can be used to collect data and comprehend foreign and domestic trade that occurs both within and outside the country in a far more effective manner. This will also aid the government in determining macroeconomic policies pertaining to the exchange of certain commodities.
Related Read: GST on labour Charges
How Do Search for 6 Digit HSN Code
Enter the name of your product to get a list of the most relevant 6-digit HSN Codes. If none of the recommendations have the correct HS code, click search to get all results. Click on the 6-digit code to see the 6 and 8-digit HS codes for export-import reasons, as well as the GST rates.
HSN Code in Case of Exports
The ITC-HS Codes are required for exports. Otherwise, the export incentives will be forfeited if the 8-digit HSN Code is not supplied on the shipping bill. HSN Codes are not required under GST for businesses with a turnover of less than ₹ 1.5 crore or if the dealer is registered under the GST Composition Scheme
Six-digit HSN codes are commonly used for commodities. Consequently, both Customs and the GST utilise identical HSN codes. Consequently, the codes from the Customs Tariff are also used for GST (as has been mentioned explicitly in the GST rate schedule). Headings (4 digits HS), subheadings (6 digits HS), and tariff items are all categorised under HS codes in Customs Tariffs (8 digits).
How to Find 6-digit HSN Codes:
HSN codes are not mere numbers; they are a systematic approach to categorising products and services, ensuring smooth taxation processes, and fostering efficient trade practices. As a business owner or a conscientious taxpayer, grasping the significance of HSN codes empowers you to navigate the complexities of GST with confidence and accuracy.
To Find HSN/ SAC Code In GST Portal :
- Navigating to GST Portal
- Navigate to the HSN code on the GST Portal homepage and sign in with your valid credentials.
- Select Services > User Services > Search HSN/SAC Code from the menu.
- Choose a Search type.
- Second, under the Search by or Search Under Choose a Category, Search for the Goods or service type you’re looking for and Select the same from the drop-down List HSN Chapter Search by Name or Code.
- In addition, in the box labelled ‘Search HSN Chapter by Name or Code,’ type in the HSN code or the chapter’s name whose rates interest you.
- Lookup for the HSN Code Additionally, in the section labelled ‘Search HSN Code,’ enter the HSN code for the items whose tax rates you wish to find up.
- Select the ‘Search’ option. Finally, once all the details have been entered, select ‘Search.’
Regarding SAC Codes.
To begin, select the Service checkbox and Enter Service Type. Finally, select ‘Search’ from the drop-down menu. After completion of the procedure that came before, the user will be given access to the specifics.
Once the procedure that came before it has been finished, the details will be made available to the user.
Businesses must be aware of the HSN codes applicable to their products, as these codes determine the associated tax rates and other regulatory requirements.
Frequently Asked Questions:
What is HSN code benefit?
Benefits of HSN Code While Using in GST
Offers a uniform system to classify goods. It takes the taxation system to a global level. It helps do international business effectively. It makes the system of filing returns easy and convenient.
Who is Required to find the 6-digit HSN code?
The updated declaration requires taxpayers with an annual aggregate turnover of more than Rs. 5 crore to include the HSN code on all tax invoices.
Is HSN code necessary in GST?
As per Notification No. 78/2020 – It is mandatory for taxpayers to report a minimum 4-digit or 6-digit HSN Code in Table 12 of GSTR-1 based on their Aggregate Annual Turnover in the preceding Financial Year.