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What is HSN Code?
HSN code stands for “Harmonized System of Nomenclature”. This system has been introduced for the systematic classification of goods all over the world. HSN code is a 6-digit uniform code that classifies 5000+ products and is accepted worldwide. It was developed by the World Customs Organization (WCO) and it came into effect from 1988.
How does HSN code work?
It has about 5,000 commodity groups, each identified by a six-digit code, arranged in a legal and logical structure. It is supported by well-defined rules to achieve uniform classification.
Why is HSN important?
The main purpose of HSN is to classify goods from all over the World in a systematic and logical manner. This brings in a uniform classification of goods and facilitates international trade.
- 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.
- Understanding the HSN Code
The HSN structure contains 21 sections, with 99 Chapters, about 1,244 headings, and 5,224 subheadings.
- Each Section is divided into Chapters. Each Chapter is divided into Headings. Each Heading is divided into Sub Headings.
- Section and Chapter titles describe broad categories of goods, while headings and subheadings describe products in detail.
For example:
Handkerchiefs made of Textile matters 62.13.90
- First two digits (62) represent the chapter number for Articles of apparel and clothing accessories, not knitted or crocheted.
- Next two digits (13) represent the heading number for handkerchiefs.
- Finally, last two digits (90) is the product code for handkerchiefs made of other textile materials.
India has 2 more digits for a deeper classification.
If the handkerchiefs are made from a man-made fibre, then the HSN code is 62.13.90.10.
If the handkerchiefs are made from silk or waste from silk., then the HSN code is 62.13.90.90.
Services Accounting Code (SAC) in GST
Like goods, services are also classified uniformly for recognition, measurement and taxation. Codes for services are called Services Accounting Code or SAC.
For example:
Legal documentation and certification services concerning patents, copyrights and other intellectual property rights-- 998213
- The first two digits are same for all services i.e. 99
- The next two digits (82) represent the major nature of service, in this case, legal services
- The last two digits (13) represent detailed nature of service, i.e., legal documentation for patents etc.
HSN in GST
HSN codes to be declared
| Turnover | No. of digits of HSN to be declared |
| Upto 1.5 crore | 4 |
| 1.5 crore- 5 crore | 4 |
| More than 5 crore | 6 |
- These HSN codes must be declared in every tax invoice issued by the taxpayer under GST.
- The turnover for previous year will be considered as a basis to find out number of HSN digits to be used.
All 8 digits of HSN code is mandatory in case of export and imports under the GST.
Why is HSN important under GST?
The purpose of HSN codes is to make GST systematic and globally accepted.
HSN codes will remove the need to upload the detailed description of the goods. This will save time and make filing easier since GST returns are automated.
A dealer or a service provider must provide HSN/SAC wise summary of sales in his GSTR-1 if his turnover falls in above slabs.
12. HSN - wise summary of outward supplies
| Sections | HSN Code List for |
|---|---|
| Section 1 | Live Animals, Animal Products |
| Section 2 | Vegetable Products |
| Section 3 | Animal or Vegetable Fats and Oils and their cleavage products, prepared edible fats, Animal or Vegetable waxes |
| Section 4 | Prepared Foodstuffs, Beverages, Spirits and Vinegar, Tobacco and Manufactured Tobacco Substitutes |
| Section 5 | Mineral Products |
| Section 6 | Product of the chemicals or allied Industries |
| Section 7 | Plastics and articles thereof, Rubber and articles thereof |
| Section 8 | Raw hides and skins, Leather, Furskins and articles thereof, saddlery and harness, travel goods, handbags and similar containers, articles of animal gut ( other than silk-worm gut ) |
| Section 9 | Wood and articles of wood, Wood charcoal, Cork and articles of cork, Manufacturers of straw, of Esparto or of other Plaiting Materials, Basketwork and Wickerwork |
| Section 10 | Pulp of wood or of other Fibrous Cellulosic Material, Recovered ( Waste and scrap ) paper or paperboard, paper and paperboard and articles thereof |
| Section 11 | Textile and textile articles |
| Section 12 | Footwear, Headgear, Umbrellas, Sun Umbrellas, Walking-sticks, seat-sticks, whips, riding-crops and parts thereof, Prepared feathers and articles made therewith, Artificial flowers, Articles of human hair |
| Section 13 | Articles of stone, plaster, cement, asbestos, mica, or similar materials, ceramic products, glass and glassware |
| Section 14 | Natural or cultured pearls, Precious or semi-precious stones, precious metals, Metal clad with precious metal, and articles thereof, Imitation Jewellery, Coins |
| Section 15 | Base Metals and articles of Base Metal |
| Section 16 | Machinery and mechanical appliances, electrical equipment, parts thereof, sound recorders and reproducers, television image and souch recorders and reproducers, and Parts and Accessories of such article |
| Section 17 | Vehicles, Aircraft, Vessels and Associated Transport Equipment |
| Section 18 | Optical, Photographic, Cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, clocks and watches, musical instruments, parts and accessories thereof |
| Section 19 | Arms and ammunition, parts and accessories thereof |
| Section 20 | Miscellaneous Manufactured Articles |
| Section 21 | Works of art, Collectors' Pieces and antiques |
How can I find my product in HSN list and its relevant HSN Code?
Please visit our website servzone.in to find out both HSN codes of goods & SAC codes of services.
What is UQC?
UQC stands for Unique Quantity Code. In simple terms, it is a unit of measurement such as 1 kilogramme of wheat, 1 litre of oil etc.
What is UQC in GST?
GST Registration
PVT. LTD. Company
Loan
Insurance
