What is the HSN Code
The World Customs Organization (WCO) created it as a multipurpose foreign commodity nomenclature that went into operation in 1988 to promote formal classification of products worldwide. HSN Code full form is ‘Harmonized System Nomenclature.’
The HSN code consists of the following elements:
- There are 21 sections.
- There are 99 chapters in all.
- There are 1244 headings.
- There are 5224 subheadings.
The HSN code structure consists of approximately 21 groups, which are further divided into 99 chapters. The chapters are then grouped into approximately 1244 headings. Following that, the headings are subdivided into 5224 subheadings. This is reflected in the code in the following way:
- A two-digit HSN number represents each chapter.
- Each two-digit HSN number is further subdivided into a four-digit HSN code.
- These four-digit HSN codes are later subdivided into six-digit HSN codes.
In certain nations, a two-digit HSN code must be added to the six-digit HSN code number to generate an eight-digit HSN code.
Steps to find GST HSN code
GST HSN Code Steps are as follows:-
- Log in with your user details in the GST portal. Select Services 🡪 User Services 🡪 Search HSN Code.
- Choose HSN in the checkbox.
- Choose the tax type. If it is SGST, then select the respective state as well
- As a next step, please enter the HSN code if not the chapter name for which you want the rate in “Search HSN Chapter by Name or Code.”
- Then you can also provide the good’s HSN code to know the tax rate in the “Search HSN Code” section.
- Then choose the date in “Effective Period.”
- Now click Search.
How to identify the HSN code just with the product name
Enter the name of your product to receive suggestions for the most applicable 4 digit HSN Codes. If the guidelines do not include the correct HS code, click check for all results. Click on the 4 digit code to obtain 6 and 8 digit HS code specifics for export-import purposes, as well as GST rates.
HSN Code list for GST
In India, all products have been meticulously categorized under each of the HSN codes under the vast ambit of the newly implemented GST, and an effective GST rate has been set for each HSN Code.
As a result, GST rates have been set differently in five slabs:
None, 5%, 12%, 18%, and 28%.
It contains 233 sets of amendments in total, grouped into the following sectors: agricultural sector 85, chemical sector 45, wood sector 13, textile sector 15, base metal sector 6, machinery sector 25, transport sector 18, and other sectors 26.
Significance of HSN code on Invoices
- When goods and offerings are recognized via their specific HSN Codes, which are globally acceptable, the identification of misinterpretation tends to reduce.
- While filing GST returns online, HSN Codes in respect of the supply of goods and services accounting code regarding the supply of services will have to be uploaded, and there will be no need for entering the description of the goods or services while filing the GST Returns.
- GST HSN Code on Invoices helps to identify products easily.
myBillBook and HSN Code
It is now easy to generate invoices using myBillBook. Using an HSN code finder you can quickly locate the HSN code for your product.
Follow these simple steps and your GST compliant invoice is ready
- Enter the GSTIN of both the parties
- Address for communication
- Invoice numbers
- Issued date
- HSN code
- CGST or SGST or IGST on items
HSN code and B2C invoice
B2C sales apply to all supplies rendered to unregistered individuals or customers. B2C invoices are those on which the end customer can not demand input tax credit (ITC). B2C invoices are currently excluded from e-invoicing.
However, as per Notification No. 14/2020-Central Tax, a taxpayer is expected to produce a dynamic QR code for allowing digital payments on all B2C invoices, as amended by Notification No. 71/2020-Central Tax. HSN Codes are also used on B2C Invoices.
FAQs on HSN Code
- How do I locate my product in the HSN catalogue and its HSN code?
Go to the ministry’s website and open the list for GST Rates for Goods and GST Rates for Services to find the HSN codes for the corresponding goods or services.
- What types of companies are exempt from using HSN codes for marketing their products?
Businesses with annual revenue of less than Rs 1.50 crores in the previous fiscal year are exempt from using the HSN Code in invoices provided for the supply of products undertaken by them.
- How many codes do companies have on their invoices?
Businesses with annual sales of more than Rs 5 Crores in the previous fiscal year must use four-digit HSN Codes for the goods they sell.
Furthermore, dealers with an annual turnover of more than Rs 1.50 crores but less than Rs 5 crores must use 2 digit HSN codes in their invoices for products supplied by them.
Finally, companies with annual revenue of less than Rs 1.50 crores are exempt from using the HSN Code in their invoices for goods sold.
Businesses that import or export products, on the other hand, are expected to have the entire 8-digit HSN Code. This is achieved by international norms and procedures.
- Where does the HSN code appear?
Each invoice provided by a supplier of products or services shall provide the appropriate HSN for the materials supplied or for the services rendered under the GST regime. As a result, any distributor or service provider must be mindful of the HSN Code List for all products and services that are subject to GST.
- Why is HSN essential in the context of GST?
The GST return filing process is fully automatic. As a result, uploading the summary of the goods provided by taxpayers would be difficult. To prevent such a problem, the HSN Code System was implemented. The HSN Codes are immediately retrieved from the taxpayer’s registration information in this scheme. As a result, the licensed taxpayer is not required to upload a clear summary of the goods he sells. This will save you time and make filing your GST Return a breeze. As a result, a distributor or service supplier must submit an HSN or SAC-by-SAC description of products or services offered in GSTR-1. This must be achieved if the dealer’s or service provider’s annual turnover is below the applicable slabs listed above.
- What are the ramifications of referencing or incorrectly mentioning the HSN Code?
It is critical to include the correct HSN Code on tax invoices and Form GSTR-1, otherwise, a liability of Rs 50,000 (Rs 25,000 each for CGST and SGST) can be imposed under Section 125 of the CGST Act for failing to include or including the incorrect HSN Code.
- Has the Government notified HSN Codes?
Yes. HSN Codes are available on the Ministry’s website. ACES website controls them at present. However, this was previously used for operation by the CBEC – Central Board of Excise and Customs.