HSN Code for GST - HSN Code & GST Rates | Tally Solutions

HSN Code

1. What is HSN code Under GST?

HSN stands for Harmonized System of Nomenclature which was developed by the World Customs Organization (WCO) with the vision of classifying goods all over the World in a systematic manner.

2. The Usage Of HSN Code for GST

  • 1. The HSN code under GST of six digit forming an uniform code helps in classifying over 5,000 products and is accepted worldwide
  • 2. The GST HSN helps in taxation purposes in identifying the HSN code wise GST rate applicable to a product in a country
  • 3. The HSN code under GST is also used to determine the quantum of item traded or imported all through a nation

3. HSN Code For GST India

HSN has been applicable in India after implementation of GST. India has already been using HSN system in the Central Excise and Customs regime.

But the GST HSN is a much more detailed classification that adds another two digits to the 6-digit structure. For certain categories of person in GST, there is even an requirement to mention HSN code with GST rate in the tax invoices prepared by them.

4. Provisions Related to HSN Code for GST India

  • 1. Small taxpayers with annual turnover up to Rs 1.50 crores in preceding financial year need not be required to mention HSN code wise GST rate in their tax invoice
  • 2. Taxpayers having turnover exceeding Rs. 1.5 crore but up to 5.00 crore will be required to mention only two digits of GST HSN
  • 3. All those taxpayers having turnover exceeding Rs 5 Crore will be required to mention four digits of GST HSN

5. Structure Of GST HSN Code

Structure: The coding process of a commodity is organized logically by economic activity or component material. For example, animals and animal products are found in one section of the HS, while machinery and mechanical appliances are found in another. The HSN book for referring to an HSN Code for a product is organized into following, by which one can make an quick reference to the HSN Code for product he is searching for:

Sections and Chapter titles 1.  Describes about broad categories of goods
2.  The first two digits of HSN Code is designated to HSN Chapter
3.  These are arranged in order of a product’s degree of manufacture or in terms of its technological complexity.  For Example : within Section X (Pulp of wood or of other fibrous cellulosic material; Recovered (waste and scrap) paper or paperboard; Paper and paperboard and articles thereof), Chapter 47 provides for pulp of wood or of other fibrous cellulosic materials, whereas Chapter 49 covers printed books, newspapers, and other printed matter
4.  For instance, natural commodities, such as live animals and vegetables are described in the early sections of the HS, whereas more evolved goods such as machinery and precision instruments are described in later sections
Headings and Sub-headings 1.  Describes about the Product in Specific or in detail
2.  The next two digits of HSN Code is attributed to Headings and the third set of two digits is for HS Sub Headings
3.  The headings within individual Chapters follow a similar order. For example, the first heading in Chapter 50 (Silk) provides for silkworm cocoons while articles made of silk are covered by the chapter's later headings

6. GST HSN Code Search

  • I. How do I carry out a GST HSN Code Search?
  • a. You will need a GST rate finder tool to find the HSN code for the given product
  • b. There are other ways also to decode HSN code for a given product such as by visiting Central Board or excise and customs department website and other third party apps on play store and iOS platform
  • II. Why do I need a GST rate finder?
  • Indian Taxation System has categorized over 1211 goods for levy of GST under 6 broad categories or tax-slabs
  • These are 0% or No Tax, 5%, 12%, 18% and 28%
  • So it becomes important to know in which of these categories your product or good has been classified. And one can easily find that with a search using commonly used word for the product.

    So the Rate Finder Tool is used to find the HSN Code for the goods or products for invoicing purposes.

7. Relationship Of HSN Code And GST Rate

HSN code
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