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What is HSN?
The Harmonized System of Nomenclature or HSN has been developed by the WCO or World Customs Organization for giving a code to the various goods around the globe in a proper manner for a taxation system for finding different types of products. HSN has more than five thousand different products, and this was initiated in the year 1988. It is quite widespread and has been adopted in greater than two hundred countries for proper classification, using the base for various tariffs and also for the collection of the international trade statistics.
Search HSN Code
https://services.gst.gov.in/services/searchhsnsac
Process of working of the HSN Code
HSN code has greater than five thousand different commodity groups each of them was identified by a 6 digit code that is arranged in a logical and legal structure. HSN code is well supported by some rules to achieve a uniform structure.
HSN Code Importance
This HSN code is generally accepted across the world to classify different products which makes it easy for the HSN Code Finder for identifying various goods for foreign and domestic trade. It is also used in gathering data for understanding domestic and foreign in a better way. So, the HSN code aids the government in choosing different macroeconomic policies which are related to the trade practices of different goods.
Some of the latest updates on HSN related to GST
Some of the HSN codes which were declared on March 31, 2021:
Some of the HSN codes which were declared on April 1, 2021:
(CGST notification no. 78/2020 which was dated October 15, 2020)
Note:
The aggregate turnover (annual) in the preceding financial year, which is, for the invoice of the financial year 2021-22 turnover which is to be referred should be of the financial year 2020-21.
HSN Worldwide
Any HSN Finder is currently being used by greater than two hundred economies and countries for the below-mentioned reasons:-
- Customs tariffs base
- Proper classification of different products or goods
- Collection of the statistics of the international trade
This is an essential fact about the HSN which is that over 98% of the total merchandise in the international trade can be classified through HSN.
HSN in India
India has been a member of the 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 HSN will help every taxpayer in India to search the GST rate by just entering the HSN code after which the system will automatically show the tax rate applicable on the commodity under the GST, hence simplifying the trade procedures in India.
Structure of HSN Code
The main structure of HSN has 21 Sections along with 99 Chapters, plus a total of 1,244 headings which have 5,224 subheadings. So every Section has various Chapters and each of the Chapters has various Headings. Further, each Heading has smaller Subheadings. While the Chapters and Sections have different products or goods, the Subheading and Heading denote these products in some detail.
GST and HSN
If one is importing and exporting it is essential for all the goods for having all eight digits of the HSN code under the GST.
- Chapter: There are a total of 99 chapters under the module of HSN.
- Heading: There are 1244 headings under the chapters.
- Subheading: Under the headings, there are 5224 subheadings.
Under the guidelines of WCO, the first 6 digits of the HSN code cannot be changed but the remaining four can be easily changed as it includes National tariff and Regional tariff which are changed less frequently by the customs authority of any country.
What is an HSN Code for GST?
HSN codes which were only applicable to the CEC or Central Excise and Customs, later after the GST was implemented, it is mandatory for all businesses or companies to mention the HSN codes in the invoices. Below mentioned are the GST turnover and the HSN digits which need to be written:-
The turnover below Rs 1.5 cr by any business or company – no need to mention the HSN code
The turnover between 1.5 cr and 5cr – one only needs to mention the HSN code till 2 digits
The turnover greater than 5cr – one needs to mention the HSN code till 4 digits
HSN classification was applicable in India from the CEC or Central Excise and Customs regime, but this became more detailed after GST, now two more digits have been added. So, the HSN code through the GST regime must have 8 digits.
What is SAC?
Like HSN code finders, codes meant for services are named SAC or Services Accounting Code. As goods, services too are classified evenly for taxation, measurement, and recognition purposes.
The Central Board of Indirect Tax issues SAC to classify each service. These codes are used when generating invoices against the services rendered.
Format of SAC
The SAC code comprises a unique 6-digit number that includes two numbers each for Heading, Chapter, and Subheading.
One can understand this with the help of an example given below:
SAC code meant for certification services and Legal documentation concerning copyrights patents, copyrights, and other intellectual property rights is 998213
The first two digits are the same for all services i.e. 99
The next two digits (82) stand for nature of service, in this case, legal services – Heading
The last two digits (13) stand for the detailed nature of service, i.e., legal documentation for patents – Subheading.
GST HSN Finder – Steps to Search HSN/SAC Tax Rates
You are required to follow the following steps in order to get the HSN codes for GST:
- Step 1: Firstly, you need to visit the homepage of the GST portal – https://services.gst.gov.in/services/searchhsnsac and then enter the login details like Username and Password.
- Step 2: Then you have to click on Services > User Services > Search HSN/SAC code. Then the HSN checkbox is required to be clicked.
- Step 3: Then from the Tax-Type drop-down list you have to select the tax type that you are searching for.
- Step 4: Now, the HSN code has to be entered or the name of the chapter whose rates need to be looked for under the “Search HSN Chapter by Name or Code.”
- Step 5: Now, you need to enter the HSN code of the goods whose tax rates are looked for under the “Search HSN Code” category. Then the appropriate dates from the calendar have to be selected in the “Effective Period” category.
- Step 6: Once all the details are filled in the “Search” option needs to be clicked.
While searching for SGST from the Tax Type list, you are also required to select the state for which you wish to check the tax rate.
For knowing SAC codes, you have to follow the steps listed below:
- Step 1: First of all the SAC checkbox needs to be clicked. Then you have to search the tax type you are searching for in the Tax-Type drop-down list.
- Step 2: Select the tax type you are searching for in the Tax-Type drop-down list.
- Step 3: The next step is entering the Service Classification Code (SAC) whose rates you are searching under the “Service by Name or Code.”
- Step 4: Further the appropriate dates from the calendar need to be selected in the “Effective Period” category.
- Step 5: Last but not least the “Search” option needs to be clicked and the details will be visible on the screen.
HSN code list section-wise
HSN code chapter wise list
Below mentioned is the HSN Chapter code list:
HSN Code FAQs:
1. If a company’s turnover is below 1.5 crore, does one need HSN code?
No, if a company’s turnover is below 1.5 crore, one does not need HSN code.
2. Why is HSN code required in GST?
It is required for easier identification of goods.
3. How many GST slabs are there?
There are 5 GST slabs like 0%, 5%, 12%, 18% and 28%.
4. How many digits are there in the GST HSN code?
There are 8 digits in the GST HSN code.
5. How to find HSN code?
To find HSN code, you need to follow the steps above.
6. Is HSN code necessary for companies?
Yes, HSN code is necessary for companies.
7. What is the full form of HSN?
The Harmonized System of Nomenclature is the full form of HSN.
8. What is the full form SAC?
Service Account Code is the full form of SAC.
9. What is the difference between SAC and HSN?
HSN is for goods while SAC is for services.
10. How many digits does SAC have?
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