HSN code refers to the Harmonized System of Nomenclature code, a comprehensive international product classification system. Under GST, the structure of HSN code consists of a series of numbers. HSN codes' first two-digit chapters indicate the broader category of goods. The second two-digit digit denotes the heading specifying the type of products within the chapter. The subsequent digit provides further details down to a different product level.
There are some differences between SAC codes and HSN codes. HSN codes are used for classifying goods, whereas SAC codes are used for classifying services. HSN codes follow an 8-digit format, while SAC codes are in a 6-digit format. HSN codes are issued by the World Customs Organization (WCO), and SAC codes are issued by the Central Board of Excise and Customs (CBEC).
As an internationally used standard, the initial 6 digits of the HSN Code are identical to all the countries. But in order to extend classification, more digits have been added to individual HS Code systems by the respective countries. For instance, We have an 4, 6 & 8 digit classification in India whereas the US has HTS Codes called Harmonised Tariff Schedule, which follows a 10 digit classification.
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HSN code stands for Harmonized System of Nomenclature. Its system classifies goods across the world. HSN code is a 6-digit uniform code classifying over 5000 products. Note that this code is accepted all around the world.
SAC (Service Accounting Code) is a classification system developed by the GST Department of India for all services. It plays a crucial role in fixing GST rates on services, categorizing them into five slabs: 0%, 5%, 12%, 18%, and 28%.
HSN codes are utilized to classify goods under the Goods and Services Tax (GST), with the World Customs Organization issuing these 8-digit codes. On the other hand, SAC codes, which are 6-digit codes, are employed to categorize services and are issued by the Central Board of Excise and Customs (CBEC) department
HSN codes are required to be mentioned on invoices or Bills of Supply, and in the GSTR-1 return.
If any business has a turnover of less than Rs 1.5 Cr, they do not need to use HSN codes. Turnover between ₹1.5 crore and ₹5 crore: Mandatory use of 2-digit HSN codes. Turnover over ₹5 crore: Requirement to use 4-digit HSN codes. Importers and exporters: Must use 8-digit HSN codes.
Turnover above Rs. 5 crore must use a 6-digit HSN code for all invoices. Turnover less than or equal to Rs. 5 crore must use a 4-digit HSN code for all the B2B invoices.
HSN codes consist of a series of numbers. The first two digits represent the chapter, indicating the broader category of goods. The next two digits denote the heading, specifying the type of product within the chapter. Subsequent digits provide further detail, down to a specific product level.
Yes, it's mandatory to mention HSN codes in the invoice or bill of supply.
HSN codes are unique for every product due to a hierarchical structure that provides increasing specificity with each additional digit.
Taking an example of edible vegetables: Onion per kg: Rs. 40 per kg HSN code: 07031010 GST rate: 5% GST: Rs 2
