1. What is the HSN Code?
The Harmonized Commodity Description and Coding System generally refers to “Harmonized System of Nomenclature” or simply “HSN”. It is a multipurpose international product nomenclature developed by the World Customs Organization (WCO). It first came into effect in 1988.
2. 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.
3. 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.
4. HSN Worldwide
The HSN system is used by more than 200 countries and economies for reasons such as:
· Uniform classification
· The 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 the same for almost all goods. However, HSN number used in some of the countries varies little, based on the nature of goods classified.
5. HSN in India
India is 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.
6. 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.
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 fiber, then the HSN code is 220.127.116.11.
If the handkerchiefs are made from silk or waste from silk, then the HSN code is 18.104.22.168.
7. Services Accounting Code (SAC) in GST
As goods, services are also classified uniformly for recognition, measurement, and taxation. Codes for services are called Services Accounting Code or SAC.
Legal documentation and certification services concerning patents, copyrights, and other intellectual property rights-- 998213
· The first two digits are the 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 the detailed nature of service, i.e., legal documentation for patents etc.
8. HSN in GST
HSN codes to be declared
· These HSN codes must be declared in every tax invoice issued by the taxpayer under GST.
· The turnover for the previous year will be considered as a basis to find out the number of HSN digits to be used.
All 8 digits of HSN code are mandatory in the case of export and imports under the GST.
9. 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 a 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 an HSN/SAC wise summary of sales in his GSTR-1 if his turnover falls in the above slabs.
10. HSN - wise summary of outward supplies
11. How can I find my product in HSN list and its relevant HSN Code?
Please visit our handy HSN Calculator to find out both HSN codes of goods & SAC codes of services.
12. What is UQC?
UQC stands for Unique Quantity Code. In simple terms, it is a unit of measurement such as 1 kilogram of wheat, 1 liter of oil etc.
13. What is UQC in GST?
As per CGST Rules, any tax invoice, credit note, debit note must have UQC or quantity unit description.
100 meters of fabric
To minimize errors while filing GST returns, it’s important to know the right HSN code for your product.
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