What is HSN code? Understanding its Significance

HSN stands for Harmonised System of Nomenclature. HSN code is used worldwide to identify different categories and types of products. Usually HSN code is 6 digits long but in India there are additional 2 digits are used to add deeper details. This code was introduced in 1988 by World Custom Organisations for classification of goods both Domestic and International.

What is HSN code? Understanding its Significance

How to find your HSN code?

You can easily find your HSN code At GST portal just follow these simple steps:

  • Visit: https://www.gst.gov.in/ 
  • Go to – Services – User Services – Search HSN Code 
  • You will need to enter Chapter, Name or code, in case if you don’t have these details you can download the HSN excel sheet and search there.

HSN Code in India

In India, HSN codes are used to regulate trade and make it easy to check and compute the GST rate that is payable on every item. Using the HSN code, anyone may obtain the GST rate for their products, making trading faster and easier. It is also required to utilise the correct HSN numbers when completing GST returns in order for payments to be confirmed.

Who needs HSN Code?

Businesses with turnover less than 1.5 crores do not need to use HSN code. All the business with turnover more than 1.5 crores needs to adopt HSN codes for their commodities.

Understanding the code and how does it work

HSN code contains 21 sections which are divided into 99 chapters which contains 1244 sub sections. HSN codes apply to custom and GST. HS codes are prescribed in Customs Tariff as heading (4 digits HS), sub-heading (6 digits HS), and tariff items (8 digits). These documents can be found on the Central Board of Indirect Tax and Customs (CBIC) website.

This is how the Indian HSN code breaks up:      

  • Chapter – 2 digits
  • Heading – 2 digits
  • Sub-Heading – 2 digits

  • India Sub Classification – 2 digits

Importance of HSN Code

HSN is widely used all over the world. Distinct goods have different HSN codes. HSN codes eliminate the need to upload product information, making GST returns quicker to file. It is very vital that you are well aware of this code to avoid confusion and keep your shipping experience smooth.

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