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What is HSN Code and How it works in GST Scenario

What is HSN Code and How it works in GST Scenario



                                  Harmonized Commodity Description and coding system generally referred to a Harmonized System of Nomenclature”, or simply “HSN” is a multipurpose international product nomenclature developed by the World Customs Organization (WCO)


India , a member of WCO since 1971,has been using HSN Codes since 1986 to classify commodities for customs and central excise .Customs and central excise added more digits to make codes more precise ,resulting in an eight digit classification.


The HS code consists of 6-digits. The first two digits designate the HS Chapter. The second two digits designate the HS heading. The third two digits designate the HS subheading. HS code 1006.30, for example indicates Chapter 10 (Cereals), Heading 06 (Rice), and Subheading 30 (Semi-milled or wholly milled rice, whether or not polished or glazed)

 

 

When it comes to being under GST the majority of the dealers will need to adopt two- four or eight digit HSN codes for their commodities, depending on their turnover the previous year.

 

The small business under composition scheme will not be required to mention SAC codes in their invoice.

At the time of registration, migration the business taxpayer will be required to mention HSN codes of the goods he deals with during registration

Services will be classified as per the services accounting code SAC there service accounting codes issued by the govt. for service tax. This is expected to remain stable in GST regime.

 How codes to be maintained under GST Scenarios as per below table

 

First Year of GST

Second year onwards

Optional             < 1.5 Crores

2 Digits < 1.5 Crores

2 Digits 1.5 -5  Crores

 

4 Digits TO Between 1.5 -5 Crores

4 Digits > 5 Crores

 

8 Digits > 5 Crores

8 Digits – All exports

 

 

8 Digits – All exports

 

 

 

 

 

 

 

 

Particulars

Chapter

Heading

Sub Heading

Entry

Digits

2 Digits

+2 Digits

+2 Digits

+2 Digits

 

 

Eg.

HSN Code for Safety helmets is  “65 06 10 10 “

Case-1

If your Turnover is between 1.5-5 Crores -HSN Code will 65 as per the first two  digits

Case-2

If your Turnover is greater than 5 Crores  it will be 6506

Case -3

If you are Export Dealer your HSN Code will 65061010 all 8 digits need to be maintained


Click here for downloading the HSN Code File

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