The World Customs Organization (WCO) invented and established the Harmonized System of Nomenclature, which is an HSN Code full form to classify products from all over the world in a standardized and rational manner. It’s a six-digit universal code that classifies over 5,000 goods and is used all over the world.
This collection of rules is used in taxes to determine the tax rate that applies to a commodity in a given region. It’s also used to figure out how much commodity is exported or imported into a region. It is a critical function for analyzing the global flow of commodities. It is made up of various parts that are further divided into chapters, which are further divided into headings and subheadings. The six-digit code is the resultant number.
HSN is widely used and adopted in over 200 countries, accounting for 98 percent of all products sold worldwide. It is, without a doubt, the most rational classification and recognition method used in international trade. It also aided in the reduction of labor and prices associated with complicated international trade procedures.
GST HSN Code in India
India is preparing to implement its Goods and Services Tax, or GST, which would apply to all goods and services. Many indirect taxes would be absorbed, reducing the pressure on the final user. India has been using the HSN scheme in the Central Excise and Customs regime since 1986. It’s a lot more complex grouping, with two more digits added to the six-digit structure. It’s a lot more complex grouping, with two more digits added to the six-digit structure. Indian manufacturers would be expected to follow a three-tiered HSN system under GST.
- HSN is not needed for those with a turnover of less than INR 1.5 crores.
- The 2 digit HSN codes are for businesses with a revenue of more than INR 1.5 crores but less than INR 5 crores.
- All with a turnover of more than INR 5 crores must use the four-digit HSN codes.
- Importers and exporters must adhere to the HSN codes, which are eight digits long.
HSN Code List Digits
The HSN is divided into 21 parts, each of which has 99 chapters, 1,244 headings, and 5,224 sub-headings. The section or chapter to which the product belongs is determined by its industrial and technical sophistication. As a result, all-natural materials, such as vegetables and animal products, are found in the earlier sections, whereas commercial equipment is found in the later stages.
The parts are divided into broad categories. Chapters, on the other hand, are classified even more precisely. Section 11 includes all types of textiles and clothing articles, while Chapter 62, which is part of Section 11, is specifically for men’s and women’s accessories.
Chapters have been subdivided into headings and subheadings as you progress down the chain. Under the Chapters, the headings concentrate on various categories of items. Continuing with the previous illustration, heading 13 of Chapter 62 covers all forms of handkerchiefs, while heading 14 covers various scarves and shawls. There is a commodity associated with each of these headings.
Handkerchiefs made of other textile fabrics, for example, fall under heading 13 of Chapter 62. The product’s HSN code is 62.13.90, with 90 being the product code for handkerchiefs made of other textiles. The HSN code becomes 18.104.22.168 as the handkerchiefs are made from a human-made fiber. Similarly, 22.214.171.124 is used for silk handkerchiefs and silk waste.
When a substance is classified using the aforementioned structure, the General Interpretation Rules must be followed. When classifying a commodity, the trade jargon of the product must be tested first, not the technical exploitation. There is no need to dig down deeper in the strata below if the commodity is graded on the first rank.
HSN- 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 silkworm 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 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|
Where are the Codes Used?
For acknowledgment, estimation, and taxation, various utilities are often graded universally. Services Accounting Codes, or SACs, are codes for services. Animal products, mineral products, plastic articles, clothing, weapons and ammunition, and machinery all require an HSN code.
Importance of HSN under GST
HSN codes are used to make GST more standardized and globally accepted. HSN codes would eliminate the need to post a full product summary. Since GST returns are automatic, this will save time and make filing simpler. If a distributor or service provider’s turnover is in the above slabs, he or she must have an HSN/SAC-by-HSN/SAC report of transactions in his GSTR-1.
GST HSN Code – FAQs
Q1. How to find a product in the HSN list and its relevant HSN Code?
Please use our HSN Calculator to determine all HSN and SAC codes for products and services.
Q2. What is UQC?
UQC is an abbreviation for Unique Quantity Code. In basic words, it is a unit of measurement for things like flour, oil, and other liquids.
Q3. What is UQC in GST?
Any tax invoice, credit note, or debit note must have a UQC or quantity unit description, according to CGST rules.
100 meters of cotton, for example.
Q4. Is it necessary to follow the HSN Code?
The HSN code ensures product standardization and global adoption. Under the GST regime, all businesses that are subject to the HSN scheme must obtain an HSN code in order to be taxed at the correct rate fixed by the Indian authorities.
Q5. Is an HSN code required while filing a GST return filing?
Yes, since it would be impossible for the company to insert all of the dealer’s information. HSN code is an option for businesses that will help them save time. However, when filing the data in the GST Return, companies must pick the HSN code carefully.