HSN Codes: What Are They?
Using HSN codes removes uncertainty and makes it easier to conduct business both nationally and globally. More than 20,000 goods are traded using the HSN codes around the world. The World Customs Organization handles more than 90% of global trade using the new HSN codes. India has now joined the HSN codes community by approving the procedure.
Who Should Use the HSN Code in India?
The following laws and notifications govern the use of HSN codes by retailers and wholesalers in India. They should use 2 digit, 4 digit, or 8 digit HSN codes for trading within or outside of the country:
- A company with a turnover under Rs. 1.5 crores does not need to use HSN codes; however, a company with a turnover between Rs. 1.5 crores and Rs. 5 crores must use HSN codes.
- For companies with annual revenues over 5 crores, only four-digit HSN numbers can be used.
For imports and exports, as well as international transactions, HSN numbers are required.
- Almost all commodities in trade are covered by the HSN module, which is divided into 21 divisions, 99 chapters, 1244 headings, and 5244 subheadings.
- At random, choose HSN code 3908 90 20
- HSN code chapter (39) is represented by the first two numbers
- There are two numerals (08) that represent the chapter headers
- Next are two digits (90), which identify the subheadings, and then six digits. The HSN code is internationally recognized.
- Following are the two digits (20) that separate the tariff headings for supply, import, and export
You would be able to save time and money by using HSN codes under India’s GST system.
How Does the HSN Code Work?
In the context of domestic and international trade, the HSN Code provides a reasonable method of identifying commodities because it is a globally recognized product classification standard. As a result, it can be used to gather data and understand domestic and foreign trade that occurs within and outside of the country much more effectively. Furthermore, this will help the government determine macroeconomic policies related to certain commodities’ trade.
What companies offer HSN codes?
Any revisions, formulations, or additions to the HSN Codes (Directorate General of Foreign Trade) are the responsibility of DGFT. In order to maintain the HSN Codes, it is necessary to make constant updates to product descriptions, remove dead codes, insert new codes, and so forth as part of a continual process of refining them.
What is the process for searching for HSN codes?
Click search to get all the relevant 4 digit HSN codes for your product. Enter the name of your product to find the most relevant 4 digit HSN codes. Click the 4 digit code to view the 6 and 8 digit HS codes for export-import purposes, as well as the GST rates.
Start your search by entering the first two or four digits of the HSN Code.
Category Lists and HSN Codes
We have divided the list of HSN Codes into 23 major categories. Use this menu to find HSN Codes with 2 digits, 4 digits, 6 digits, and 8 digits.
HSN Codes: Are They Necessary?
It is essential to provide the 8-digit HSN Code on the shipping bill if exports require ITC-HS Codes, otherwise the export incentives will be forfeited. Businesses with a turnover of less than 1.5 crore or dealers who are registered under the GST Composition Scheme are exempt from having HSN Codes.
GST and HSN Code Information
According to the Ministry of Finance, all invoices issued by GST-registered businesses with a turnover over $5 crore must include an HSN or tariff number. The new rule took effect on April 1, 2021.
“GST taxpayers with an annual turnover of more than $5 crore must include a 6-digit HSN Code or, if applicable, a SAC (Service Accounting Code) on invoices for deliveries of taxable goods and services with effect from that date. If the previous fiscal year’s turnover was up to 5 crore, an HSN code is required on B2B invoices. Previously, the required number of digits was four and two.”
For commodities, six-digit HSN codes are common. Consequently, both Customs and the GST use the same HSN codes. Therefore, the codes from the Customs Tariff are also used for GST (as indicated in the GST rate schedule). As part of Customs Tariffs (8 digits), headings (4 digits), subheadings (6 digits), and tariff items are all categorized by HS codes.
A HSN search function is also included in the GST portal. Manufacturers and importers/exporters extensively use HSN Codes. Manufacturers already provided these codes before the implementation of GST. Manufacturers and importers provided these codes in import and export paperwork, and traders commonly use HSN numbers on invoices from manufacturers and importers. Invoices, e-way bills, and GSTR 1 reports are already containing HS codes/SACs with 6/8-digit numbers as a result of the change.