The HSN Code (Harmonized System Nomenclature) is a system of classifying goods for international trade. It is used globally to identify products and services traded between countries. The HSN Code is also widely used under Goods and Services Tax (GST) in India to simplify the taxation process by categorizing products and applying the appropriate tax rates.
What is HSN Code?
The HSN Code is a universal system for classifying goods based on their nature and characteristics. It is designed and maintained by the World Customs Organization (WCO), and its purpose is to standardize the naming of goods across the globe to promote easier international trade.
- The HSN Code is a numeric code assigned to each product.
- It is used by customs authorities and tax authorities to categorize goods and apply appropriate tariffs, taxes, or duties.
- It is part of an international system that helps identify products accurately for trading, regulation, and taxation purposes.
HSN Code Structure
The HSN Code follows a hierarchical structure and is six digits long, which is broken down as follows:
First two digits (Chapter):
Represent the broad category of goods. For example:- Chapter 01: Live animals
- Chapter 02: Meat and edible meat offal
Next two digits (Heading):
Narrow down the category further into more specific products. For example:- 0101: Live horses, asses, mules, and hinnies
- 0201: Meat of bovine animals
Next two digits (Subheading):
Offer even more detailed classifications, identifying specific goods. For example:- 010121: Horses, live, purebred breeding
- 020110: Fresh or chilled meat of bovine animals
The HSN system allows for further subdivisions (up to 8 digits in some countries) to precisely classify goods for tax or tariff purposes.
HSN Code for GST in India
Under the Goods and Services Tax (GST) system in India, the HSN Code is used to classify goods for tax purposes. This ensures consistency and transparency in the application of GST rates to different types of goods.
Why is HSN Code Important under GST?
Tax Classification:
The HSN Code helps to determine which GST rate applies to a specific product. For example, the GST rate for a product like coffee beans may be different from that of computers. The HSN code simplifies this classification.Simplified Reporting:
Businesses need to use the HSN Code while filing their GST returns. This ensures uniformity in the reporting of goods and makes it easier for tax authorities to assess the tax on goods.International Trade:
The HSN Code system ensures that Indian businesses can easily trade with foreign countries as it aligns with the international classification system. This reduces the complexity and potential errors in cross-border transactions.
HSN Code and GST Rates in India
In India, the GST Council has prescribed specific HSN Codes for different goods and the corresponding GST rates. The GST rates range from 5% to 28%, depending on the category of the goods. Here’s how it works:
- Chapter 1 to 98 in the HSN code correspond to various goods, from food items to machinery.
- Products in each HSN category are assigned a specific GST rate, which is applicable to that group of goods.
- Some goods may qualify for zero GST, especially essential items like fresh fruits, vegetables, or books.
For example:
- HSN Code 0101: Live horses, asses, mules, and hinnies – GST rate: 5%
- HSN Code 1006: Rice – GST rate: 5% or nil (depending on the type)
- HSN Code 8528: Televisions – GST rate: 28%
FAQs
HSN Code for GST – Applicability for Businesses?
Small Businesses (Turnover Below ₹5 Crore):
- For businesses with turnover below ₹5 crore, HSN code is not mandatory for filing returns. However, businesses can use it to streamline their operations and for internal record-keeping.
Businesses with Turnover Above ₹5 Crore:
- Businesses with turnover exceeding ₹5 crore are required to mention the HSN code for every product in their GST returns.
Service Providers:
- The HSN code system primarily applies to goods, but for services, a separate SAC code (Services Accounting Code) is used to classify services under GST.
How to Find HSN Code for Products?
Businesses or individuals can find the relevant HSN code for their products by referring to:
GST Portal:
The official GST website of India provides a detailed HSN code directory for every product.Tax Consultants:
Businesses can also consult tax professionals who can help identify the appropriate HSN code based on their products.HSN Code Lists:
HSN Code lists are also published by trade and commerce associations, which categorize goods in different sectors.
Practice area's of B K Goyal & Co LLP
Income Tax Return Filing | Income Tax Appeal | Income Tax Notice | GST Registration | GST Return Filing | FSSAI Registration | Company Registration | Company Audit | Company Annual Compliance | Income Tax Audit | Nidhi Company Registration| LLP Registration | Accounting in India | NGO Registration | NGO Audit | ESG | BRSR | Private Security Agency | Udyam Registration | Trademark Registration | Copyright Registration | Patent Registration | Import Export Code | Forensic Accounting and Fraud Detection | Section 8 Company | Foreign Company | 80G and 12A Certificate | FCRA Registration |DGGI Cases | Scrutiny Cases | Income Escapement Cases | Search & Seizure | CIT Appeal | ITAT Appeal | Auditors | Internal Audit | Financial Audit | Process Audit | IEC Code | CA Certification | Income Tax Demand Notice | Psara License | FCRA Online
Company Registration Services in major cities of India
Company Registration in Jaipur | Company Registration in Delhi | Company Registration in Pune | Company Registration in Hyderabad | Company Registration in Bangalore | Company Registration in Chennai | Company Registration in Kolkata | Company Registration in Mumbai | Company Registration in India | Company Registration in Gurgaon | Company Registration in Noida | Company Registration in lucknow
Most read resources
tnreginet |rajssp | jharsewa | picme | pmkisan | webland | bonafide certificate | rent agreement format | tax audit applicability | 7/12 online maharasthra | kerala psc registration | antyodaya saral portal | appointment letter format | GST Search Taxpayer | caro 2020 | Challan 280 | itr intimation password | internal audit applicability | preliminiary expenses | mAadhar | e shram card | aaple sarkar portal | epf activation | scrap business | brsr | depreciation on computer | west bengal land registration | traces portal | Directorate general of GST Intelligence | form 16 | rtps | patta chitta