GST HSN Codes List: Find the Right Code for Your Products
GST HSN Codes List

GST HSN Codes List: Find the Right Code for Your Products

We have tried to bind the complete details of the GST HSN Codes List, its structure, and its importance in one single place. Let’s explore each section carefully to understand its concepts. If you are stuck at any point or looking to learn the complete GST concepts from the basics, check GST courses. It will help you to clear your doubts.

International trade and commerce need to be precise and uniform. It means that products and goods need to be classified accurately. This is not just for convenience, but it is essential for smooth cross-border transactions, taxation, and following trade rules. The Harmonized System of Nomenclature which is the HSN code is a standardized system for classifying goods. It provides a common language for trade and makes customs procedures easier.

In short, the GST HSN Codes List is a valuable resource that not only ensures adherence to tax regulations but also fosters efficiency, transparency, and informed decision-making in the realm of commerce and trade.

HSN Codes Meaning

HSN stands for Harmonized System of Nomenclature. It has been designed to identify different products that are used by all the countries of the world. The World Customs Organization (WCO) created and maintains the HSN code. It is a multi-digit code that represents a specific product or item. It is used as a universal language for classifying goods which helps to make global trade easier and more efficient.

How HSN codes are structured

HSN codes are not just a random collection of numbers. They follow a systematic structure that gets more specific as it goes on. Let’s understand the structure of each component:

  • Chapter: The first two digits of the code represent the chapter, which broadly categorizes products into 21 sections. These chapters are divided based on the product type. For example live animals, vegetables, textiles, machinery, and more.
  • Heading: The first four digits of the code (including the chapter) represent the heading. Headings provide more specific information about the product category within a chapter.
  • Subheading: The first six digits of the code (including the chapter and heading) make up the sub-heading. Subheadings offer even more detailed information about the product.
  • Further sub-heading (optional): Some countries may choose to add additional digits to the code for even more precise classification.
  • This hierarchical structure ensures that each code accurately reflects the product’s nature and characteristics.

Why is the HSN code used?

HSN codes are important for international trade, customs, taxation, and data analysis. Let’s see each one in more detail below:

  • International trade: It provides a common language for businesses and governments around the world to classify products. The import and export of goods became easy after its introduction.
  • Customs: Customs officers use these codes to determine the appropriate duty rates, import restrictions, and regulations for imported and exported products. It helps to reduce delays in customs clearance.
  • Taxation: In many countries, it is used to determine the applicable GST rates for various products and services. It helps tax authorities to assess the correct tax rates for different products.
  • Data analysis: Governments and businesses can collect and analyze data related to HSN codes. It helps them to make informed decisions about trade policies, tariffs, market trends, and the overall economic landscape.
  • I hope now you can analyze its importance for both in-house and in international markets. There are so many things under GST that you have to know if you truly want to become a GST specialist.

HSN code list is used globally to manage business operations and transactions efficiently. In the next section, we will discuss its implications in different regions around the world.

HSN Codes Around the World

HSN codes are not just used in one country. This code is used globally and it will help all the countries to trade freely with each other. T Different countries and regions have their versions of HSN codes, which may be more or less specific. Explore how it is used in the countries mentioned below:

India

In India, HSN codes are used for the Goods and Services Tax (GST) system. They are used to classify goods and determine the GST rate. Indian businesses must use the correct codes on their invoices to follow GST rules.

United States

In the United States, the Harmonized System (HS) is used to classify goods for import and export. The HS is similar to the HSN, but there are some differences in how goods are classified and what terms are used.

European Union

The European Union uses a system called the Combined Nomenclature (CN) to classify goods for customs and trade. The CN is based on the international HSN system, but it has extra subdivisions to meet the EU’s specific needs.

Different countries use different forms of HSN but the objective is the same. They have different names for the code and a few terms may vary but the motive is kept the same.

Now we will see how you can find the HSN code for different products. There is a complete HSN code list which you can find with the help of tools and other means. In the below section, we have explained this to you.

How do I find the HSN code?

It is very important to find the correct HSN Code for any product. Using the correct code makes sure you follow the rules, reduces errors, and avoids delays in customs clearance. Following are the few steps that will help you search for the correct HSN code for any product:

  • Check the official HSN code list
    Many countries, including India, have an official list of HSN codes for different products. You can find these lists on government websites or tax authority portals. You can search for codes by product description or category.
  • Ask an expert
    If you’re not sure which code to use, ask a customs expert, tax consultant, or industry professional who knows about classification.
  • HSN code lookup Tools and websites
    Many tools and lookup websites are available online that can be used for searching the code. These tools often have search features and product descriptions to make the process easier

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Chapter Wise Distribution of Products with HSN Codes

Chapter Description Product HSN Code
Chapter 1 Live animals and animal products Live horses 10110
Chapter 1 Live animals and animal products The meat of sheep or goats, fresh or chilled, boneless 20120
Chapter 1 Live animals and animal products Fish, fresh or chilled, excluding fillets and other meat of fish of headings 0304 or 0305 30310
Chapter 1 Live animals and animal products Milk and cream, concentrated or not, containing not more than 1.5% fat 40110
Chapter 1 Live animals and animal products Eggs, in shell, fresh, preserved, or cooked 50400
Chapter 2 Vegetable products Potatoes, fresh or chilled 70110
Chapter 2 Vegetable products Tomatoes, fresh or chilled 70200
Chapter 2 Vegetable products Onions and shallots, fresh or chilled 70310
Chapter 2 Vegetable products Carrots, turnips, salad beets, celeriac, radishes, and similar edible roots, fresh or chilled 70610
Chapter 2 Vegetable products Cabbages, cauliflowers, kohlrabi, kale, and similar edible brassicas, fresh or chilled 70810
Chapter 3 Edible and non-edible animal and vegetable fats, oils, and waxes Olive oil 150910
Chapter 3 Edible and non-edible animal and vegetable fats, oils, and waxes Palm oil 151110
Chapter 3 Edible and non-edible animal and vegetable fats, oils, and waxes Coconut oil 151310
Chapter 3 Edible and non-edible animal and vegetable fats, oils, and waxes Soybean oil 151610
Chapter 4 Prepared foodstuff; beverages, including alcoholic beverages, and vinegar; tobacco and manufactured tobacco substitutes Bread, pastry, cakes, biscuits and other bakers’ wares, whether or not containing cocoa; communion wafers, empty cachets of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products 190510
Chapter 4 Prepared foodstuff; beverages, including alcoholic beverages, and vinegar; tobacco and manufactured tobacco substitutes Pasta, couscous and similar prepared cereals; prepared flours, meal and starch of fruit and vegetables, of roots and tubers or of sago or manioc 190210
Chapter 4 Prepared foodstuff; beverages, including alcoholic beverages, and vinegar; tobacco and manufactured tobacco substitutes Sweet treats made with sugar, without the chocolate 170410
Chapter 4 Prepared foodstuff; beverages, including alcoholic beverages, and vinegar; tobacco and manufactured tobacco substitutes Cocoa powder, unsweetened, not containing added sugar or other sweetening matter 180500
Chapter 4 Prepared foodstuff; beverages, including alcoholic beverages, and vinegar; tobacco and manufactured tobacco substitutes Chocolate bars, plates and blocks, filled; chocolate filled with fruit, nuts or other edible substances 180690
Chapter 5 Mineral products Solid fuels made from coal 270111
Chapter 5 Mineral products Petroleum jelly 271210
Chapter 5 Mineral products Portland cement 252310
Chapter 6 Products of the chemical and allied industries Organic chemicals 2901 to 2942
Chapter 6 Products of the chemical and allied industries Inorganic chemicals <2801 to 2852
Chapter 6 Products of the chemical and allied industries Pharmaceutical products 3001 to 3006
Chapter 7 Plastics and articles thereof; rubber and articles thereof Polyethylene “>390110

HSN Codes in Action

A global system for classifying goods and services, streamlining invoicing, and ensuring tax compliance. Here we will discuss its impact on the business environment and taxation system.

HSN codes are important for businesses

It is important for businesses that trade internationally or operate in countries with GST systems (like India). Using codes correctly is not just about following the rules; it can also give businesses a strategic advantage. Accurate classification ensures:

  • Smooth customs clearance: Goods that are classified correctly are less likely to be delayed or inspected by customs.
  • Accurate taxation: Businesses need to use the right code for each product to calculate and pay the correct taxes. If they classify their goods incorrectly, they may overpay or underpay their taxes.
  • Legal compliance: Businesses need to follow the rules and regulations of their country. Using codes correctly helps them to comply with these requirements.
  • Operational efficiency: Businesses can manage their supply chain and track their inventory more efficiently if their goods are classified correctly.

HSN codes and taxation

In countries like India, where the GST system is in place, It plays a significant role in taxation. Different codes have different GST rates. For example:

  • Essential goods may have lower GST rates or be exempt from GST altogether.
    Luxury goods or goods that are not considered essential may have higher GST rates.
  • By classifying their products correctly with the right code. Businesses can make sure that they are paying the correct GST rate and avoid underpaying or overpaying taxes.

HSN in GST

HSN codes are important for the GST system in India

It is used to classify goods in a uniform and structured way. This is important for the GST system in India because it helps to determine the correct GST rate for each product. It makes it easy for both businesses to follow GST regulations and for tax authorities to collect tax.

Here are some of the benefits of using it in the GST system:

  • Uniform classification: It ensures that goods are classified consistently across different states and regions in India. It is important for businesses because they do not have to worry about different GST rates being applied to the same product in different places.
  • Clarity and precision: It is very specific, which helps to prevent ambiguity in the classification of products. It reduces the risk of disputes between taxpayers and tax authorities.
  • Ease of compliance: Businesses can use it to determine the correct GST rate for their products and calculate the tax amount accordingly. Thus it makes it easier for businesses to follow GST regulations.
  • GST rate determination: It is linked to the GST rate schedule. It means that businesses can simply look up the code for their product to determine the applicable GST rate.
  • Customization: It will provide a standardized framework, but it also allows for customization. It means that businesses can be more specific about their products or services when using codes for products.
  • Data analysis: Tax authorities and policymakers can use HSN-coded data to analyze revenue generation, and identify tax evasion. It will help them to make informed decisions about tax policies and rates.
  • Cross-verification: Tax authorities can use it to cross-verify the GST returns filed by businesses. It helps to ensure that businesses are correctly reporting their sales and tax liabilities.
  • International trade: Many countries around the world use this, which means that Indian businesses can use the HSN codes list to classify goods for international trade. Thus it makes it easier to comply with customs procedures and international tax regulations.

HSN code requirements for GST invoices

Following are the essential digits that need to be mentioned:

Transaction Value HSN Code
Up to INR 1.5 crores No need to mention 1.5The
1.5 crores to 5 crores Mention 4-digit.
More than 5 crores Mention 6-digit

Challenges and considerations of using HSN codes

The HSN codes list is very detailed and specific. This is good because it helps to classify goods accurately. However, it can also make the system complex, especially for businesses that sell many different products.

The HSN system is not static; it is updated and revised regularly to reflect changes in trade, technology, and product categories. Businesses must keep track of the latest changes to ensure that they are following the rules

Different countries may use their versions of HSN or classifications. It can be challenging for businesses that trade internationally, as they need to be familiar with multiple classification systems.

Despite many challenges, HSN codes are important for the GST framework in India and other countries in the world. It helps to make international trade effective.

Key Takeaways

HSN codes play a pivotal but often overlooked role in the realm of international
trade and taxation. It establishes a standardized framework for product classification, ensuring the seamless flow of goods through customs and precise taxation.

For businesses, the accurate application of codes is not just a matter of compliance but a strategic advantage for operational efficiency.

Staying well-informed about code updates, seeking expert guidance when necessary, and harnessing online resources will be indispensable for businesses.

Frequently Asked Questions on HSN Codes

1. Is the HSN code mandatory?

Yes, it is required for Indian businesses to file GST returns and accurately categorize and tax goods and services.

2. Who will give HSN code?

The HSN code for a particular product or service can be found in the HSN code schedule. This schedule is maintained by the World Customs Organization (WCO) and is updated regularly to reflect changes in the global economy.
In India, the HSN code schedule is published by the Central Board of Indirect Taxes and Customs (CBIC). The CBIC website has a searchable database where businesses can find the HSN code for their products or services.

3. What is the limit of the HSN code?

It can have any number of digits, from 2 to 12 or more, depending on how specific the product classification needs to be.

4. Is HSN mandatory for B2C?

HSN codes are not required for businesses that sell directly to consumers (B2C) in India. It is mainly used for businesses that sell to other businesses (B2B) and for paying taxes, such as GST. Businesses can still use codes for B2C transactions, but they are not required to.

5. What if HSN code is not entered?

If you don’t enter the code in a business transaction, you could:

  • Pay the wrong amount of taxes
  • Have your transaction delayed
  • Get a penalty or even be sued

6. Can we change the HSN code?

Yes, you can change the code for a product or service, but be careful. Make sure the change follows tax rules and accurately reflects the goods or services you sell to avoid tax problems.

7. Who is eligible for the HSN code in GST?

All businesses and individuals registered for GST (Goods and Services Tax) can use the Harmonized System of Nomenclature codes to classify goods. However, businesses with a certain annual turnover, as specified by the government, are required to declare codes on their invoices. Small businesses with turnover below the threshold can use codes voluntarily, but it becomes mandatory once their turnover exceeds the specified limit.

8. What is the turnover limit for 6 digit HSN code?

The turnover limit for a 6-digit HSN code is Rs. 5 crore. This means that businesses with an annual turnover of Rs. 5 crore or more are required to declare 6-digit codes on their invoices

9. What is exempt supply in HSN?

Exempt supply in HSN means goods or services that are not taxed under GST. These are usually essential items like food, healthcare, and education. Businesses that sell exempt goods or services do not charge GST on them, and they cannot claim input tax credits on related expenses

10. Is HSN compulsory in Gstr 1?

Yes, HSN codes are required for GSTR-1 filings for businesses with an annual turnover of over Rs 1.5 crores. Businesses below this threshold can choose to report codes or not.

11. What is the HSN code for gold?

The HSN code for gold is 7108. This code covers all forms of gold, including unwrought gold, semi-manufactured gold, and monetary gold.

12. What is 4 digit HSN code?

A 4-digit is a shorter code used to classify goods and services under the GST system in India. It groups goods and services into broader categories than the more detailed 6-digit HSN code.

Disclaimer: The content posted in this weblog is intended for general information purposes only and does not include any professional accounting, tax, legal or financial advice. We strive to provide accurate and up-to-date information based on laws, regulations, and best practices which may vary by jurisdiction, industry, and individual circumstances.

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