GST HSN Code

Introduction

The Harmonized System of Nomenclature (HSN) is a globally recognized method for classifying goods. Developed by the World Customs Organization (WCO), the HSN code system standardizes product classification across countries, facilitating international trade and customs processes. In India, the HSN code plays a vital role in the Goods and Services Tax (GST) framework, impacting both tax calculation and reporting. Here’s an in-depth look at GST HSN codes and their significance.

What is the HSN Code?

HSN, short for Harmonized System of Nomenclature, is a six-digit universal code used for classifying products. The system, created by the WCO, is designed to simplify the identification and categorization of goods traded internationally. It consists of a hierarchical structure where products are classified into sections, chapters, headings, and subheadings.

HSN Code Worldwide

The HSN system is employed by over 200 countries to:

Ensure Uniform Classification: Provides a consistent method for categorizing goods across international borders.
Form Customs Tariffs: Helps in determining tariffs and duties applicable to different products.
Collect International Trade Statistics: Facilitates global trade analysis by classifying over 98% of international merchandise.

GST HSN Code in India

India adopted the HSN code system for GST to streamline the taxation of goods. The HSN code is essential for determining the tax rate applicable to various products. The complexity of the code system has increased with GST, incorporating additional digits to the basic six-digit structure.

HSN Code Requirements in India:

Turnover Below INR 1.5 Crore: No HSN code required.
Turnover Between INR 1.5 Crore and INR 5 Crore: 2-digit HSN codes.
Turnover Above INR 5 Crore: 4-digit HSN codes.
Importers and Exporters: 8-digit HSN codes for detailed classification.

HSN Code List and Structure

The HSN code system is organized into:

21 Parts: Broad categories of goods.
99 Chapters: Specific categories within each part.
1,244 Headings: Further subdivisions within chapters.
5,224 Sub-Headings: Detailed classifications under headings.

Each part, chapter, heading, and subheading defines a specific type of product, ranging from raw materials to finished goods.

Examples of HSN Codes

For instance, in textiles:

Handkerchiefs made from textile fabrics: HSN code 62.13.90.
Handkerchiefs made from human-made fibers: HSN code 62.13.90.10.
Silk handkerchiefs: HSN code 62.13.90.90.

This detailed classification helps in accurately reporting and taxing goods under GST.

HSN- Summary of Outward Supplies

Chapter	Commodities
Section I. Animals and Animal Products
Chapter 1	Animals
Chapter 2	Meat and edible offal
Chapter 3	Fish, molluscs, and other aquatic invertebrates
Chapter 4	Dairy produce, birds’ eggs, honey and other edible products of animal origin that are not specified anywhere else
Chapter 5	Products of animal origin that are not specified elsewhere
Section II. Vegetables and Vegetable Products
Chapter 6	Live trees/plants, bulbs, roots, cut flowers and ornamental foliage
Chapter 7	Edible vegetables/certain roots/tubers
Chapter 8	Edible fruit and nuts, the peel of citrus fruits or melons
Chapter 9	Tea, coffee, spices and mates
Chapter 10	Cereals
Chapter 11	Milling products, wheat gluten, malt, starches, inulin
Chapter 12	Oil seeds and oleaginous fruits, grains, straw and fodder, seeds and fruit, and industrial or medicinal plants
Chapter 13	Lac, gum, resin, extracts, etc
Chapter 14	Vegetable plaiting materials/vegetable products that are not specified elsewhere
Section III. Animal/Vegetable Oils, their respective Cleavage Products, Waxes, Prepared Edible Fats
Chapter 15	Animal/vegetable oils, their cleavage products, etc
Section IV. Prepared Food, Beverages, Spirits, Tobacco and Tobacco Substitutes
Chapter 16	Preparation of meat, fish ,molluscs, etc
Chapter 17	Sugar/Sugar confectionery
Chapter 18	Cocoa/Cocoa preparations
Chapter 19	Preparations of cereals, flour, milk, pastry products
Chapter 20	Preparation of vegetables, fruits, nuts, plant parts
Chapter 21	Miscellaneous edible preparations
Chapter 22	Beverages, vinegar, spirits etc.
Chapter 23	Residue and food waste, prepared animal fodder
Chapter 24	Tobacco and tobacco substitutes that are made
Section V. Minerals
Chapter 25	Salt, stones, sulphur, plastering material, cement, etc
Chapter 26	Ores, ash and slag
Chapter 27	Mineral fuel, mineral oils, bituminous substances etc
Section VI. Chemical Products of Allied Industries
Chapter 28	Inorganic chemicals, organic/inorganic compounds of precious metals, isotopes, rare-earth metals, radioactive elements
Chapter 29	Organic chemicals
Chapter 30	Pharmaceutical Items
Chapter 31	Fertilisers
Chapter 32	Tanning or dyeing extracts, tannins and their derivatives, dyes, pigments, varnishes, paints, inks, etc.
Chapter 33	Essential oils/resinoids, perfumery, toilet/cosmetic preparations,
Chapter 34	Soap, washing preparations, organic surface-active agents, lubricating preparations, dental preparations and dental waxes with a basis of plaster, prepared waxes, artificial waxes, candles, modelling pastes, etc
Chapter 35	Albuminoidal substances, glues, enzymes, etc
Chapter 36	Explosives, pyrotechnic products, pyrophoric alloys, some specific combustible preparations
Chapter 37	Photographic/cinematographic goods
Chapter 38	Other miscellaneous chemical products
Section VII. Plastics, Rubber, and Articles Thereof
Chapter 39	Plastics/plastic articles
Chapter 40	Rubber/rubber articles
Section VIII. Raw Hides/Skins/Furskins and Articles Thereof, Leather, Related Goods
Chapter 41	Raw hides/skins (other than furskins), leather
Chapter 42	Articles manufactured of leather, travel goods, handbags, harnesses, articles made of animal gut (except silkworm gut)
Chapter 43	Furskins/artificial fur and similar articles
Section IX. Wood/Wooden Articles, Wood Charcoal, Cork/Articles of Cork, Basket Ware, Manufacturers of Straw, Other Plaiting Material, etc
Chapter 44	Wood/wood charcoal/wooden articles
Chapter 45	Cork and articles of cork
Chapter 46	Manufactures of straw, esparto/other plaiting materials, basketware ware, etc
Section X. Pulp of Wood/Other Fibrous Cellulosic Material, Recovered Paper/Paperboard, and Articles Thereof
Chapter 47	Pulp of wood/other fibrous cellulosic material recovered paper or paperboard (scrap or waste)
Chapter 48	Paper/paperboard, articles made of paper pulp, etc
Chapter 49	Printed books, newspapers, and products of the printing industry, manuscripts, typescripts, etc
Section XI. Textile and Textile Articles
Chapter 50	Silk
Chapter 51	Wool, fine/coarse animal hair, horse hair yarn, etc
Chapter 52	Cotton
Chapter 53	Paper yarn, vegetable textile fibres, woven fabrics made of paper yarn
Chapter 54	Man-made filaments
Chapter 55	Man-made staple fibres
Chapter 56	Wadding, felt and nonwovens, cordage, twine, special yarns, ropes, etc
Chapter 57	Carpets and textile floor coverings
Chapter 58	Special woven fabrics, embroidery, tufted textile fabrics, trimmings, lace tapestries,
Chapter 59	Covered, laminated textile fabrics, coated, textile articles made for industrial use
Chapter 60	Knitted/crocheted fabrics
Chapter 61	Articles of apparel and clothing accessories that are knitted or crocheted
Chapter 62	Articles of apparel/clothing accessories that are not crocheted/knitted
Chapter 63	Other made-up textile articles, sets, worn clothing and textile articles, and rags
Section XII. Footwear, Umbrellas, Walking Sticks, Headgear, Seat Sticks, Whips, Artificial Flowers, Riding Crops, Articles of Human Hair, Prepared Feathers and Similar Articles
Chapter 64	Footwear, gaiters, and the parts of such articles
Chapter 65	Headgear and parts thereof
Chapter 66	Umbrellas and sun umbrellas, walking sticks, riding crops and parts thereof, whips, etc
Chapter 67	Prepared feathers and down and articles made thereof, articles made of human hair, artificial flowers
Section XIII. Articles Made of Stone, Plaster, Asbestos, Cement, Mica, Similar Materials, Glass/Glassware, Ceramic Products
Chapter 68	Articles made of stone, plaster, cement, asbestos, mica or similar materials
Chapter 69	Ceramic products
Chapter 70	Glass and glassware
Section XIV. Natural or Cultured Pearls, Precious Metals Clad With Precious Metal, Coins, Imitation Jewellery, Precious or Semi-Precious Stones
Chapter 71	Natural or cultured pearls, metals that are clad with precious metal and articles thereof, precious or semi-precious stones, imitation jewellery, coins
Section XV. Base Metal and Articles Made of Base Metal
Chapter 72	Iron and steel
Chapter 73	Articles made of iron/steel
Chapter 74	Copper and similar articles thereof
Chapter 75	Nickel and similar articles thereof
Chapter 76	Aluminium and similar articles thereof
Chapter 77	It is Reserved for possible future use
Chapter 78	Lead and articles thereof
Chapter 79	Zinc and articles thereof
Chapter 80	Tin and articles thereof
Chapter 81	Other base metals, cermets, etc
Chapter 82	Tools, cutlery of base metal, spoons and forks, implements, and parts thereof
Chapter 83	Miscellaneous articles made of base metal
Section XVI. Machinery and Mechanical Appliances, Sound Reproducers and Recorders, Electrical Equipment and Parts Thereof, Television Image and Sound Reproducers and Recorders
Chapter 84	Nuclear reactors, boilers, machinery and mechanical appliances, etc
Chapter 85	Electrical machinery and equipment, sound reproducers and recorders, sound reproducers and television image and recorders, etc
Section XVII. Aircraft, Vessels, Vehicles, Associated Transport Equipment
Chapter 86	Tramway/railway locomotives, tramway or railway track fixtures and fittings, rolling stock, mechanical (including electro-mechanical) traffic signalling equipment of all kinds
Chapter 87	Vehicles other than tramway/railway rolling stock, etc
Chapter 88	Aircraft, Spacecraft, its parts etc
Chapter 89	Floating structures, ships, boats
Section XVIII. Optical, Photographic, Cinematographic, Measuring, Precision, Medical/Surgical Instruments/Apparatus, Musical Instruments, Clocks/Watches, etc
Chapter 90	Optical, cinematographic, photographic, checking, precision, medical/surgical instruments/apparatus, etc
Chapter 91	Clocks and watches, its part etc
Chapter 92	Musical instruments, its parts etc
Section XIX. Arms and Ammunition, its accessories
Chapter 93	Arms and ammunition, etc
Section XX. Miscellaneous Manufactured Articles
Chapter 94	Furniture, mattresses, bedding, cushions and similar stuffed furnishing, lamps and fittings, which are not anywhere else included, illuminated signs and name-plates, etc
Chapter 95	Toys/games/sports requisites, etc
Chapter 96	Miscellaneous manufactured articles
Section XXI. Works of Art, Collectors’ Pieces/Antiques
Chapter 97	Works of art, antiques, collectors’ pieces etc
Chapter 98	Project imports, laboratory chemicals, personal imports by air or post, ship stores, passenger’s baggage
Chapter 99	Services

SAC Code

The Services Accounting Code (SAC) is used to classify services under GST. SAC codes determine the applicable GST rates for various services, which are fixed at 0%, 5%, 12%, 18%, and 28%. If services are not exempt or specifically rate-specified, the default GST rate of 18% applies.

Importance of HSN Under GST

The HSN code system standardizes the classification of goods, making GST reporting and compliance more straightforward. Key benefits include:

Simplified Reporting: Reduces the need for detailed product descriptions in GST returns.
Efficient Taxation: Ensures consistent application of tax rates across different regions and businesses.
Streamlined Compliance: Facilitates automatic GST return generation and minimizes errors.

Conclusion

The GST HSN code system is integral to India’s GST framework, providing a structured method for classifying and taxing goods. By adhering to HSN codes, businesses ensure compliance with GST regulations and streamline their reporting processes. Understanding HSN codes helps in accurate tax calculation and effective business management.

Frequently Asked Questions

What is the purpose of the HSN code?

The HSN code standardizes the classification of goods, facilitating international trade, customs tariffs, and GST reporting.

How does the HSN code benefit GST filing?

HSN codes simplify GST filing by reducing the need for detailed product descriptions and ensuring consistent tax rates.

What is the difference between HSN and SAC codes?

HSN codes classify goods, while SAC codes classify services. Both systems are used to determine applicable GST rates.

Do all businesses need to use HSN codes?

Businesses with a turnover above INR 1.5 crores must use HSN codes. Smaller businesses are exempt.

How are HSN codes structured?

HSN codes are organized into sections, chapters, headings, and subheadings, each providing a detailed classification of products.

Open Free Demat Account

Related Terms

Explore our feature-rich web trading platform

Get the link to download the App

Learn. Transform. Evolve.