Accounting & Finance

What is HSN code under GST

HSN stands for Harmonised System of Nomenclature code

What is HSN Code Under GST 2022

In the online system revolution, the convenience of goods transactions has become the norm What is HSN code. Due to the online system, the buying of products internationally is easy for the buyer but delivery of that product by the e-commerce website facing difficulty. HSN code under GST To reduce the difficulty of taxpayers and all the turmoil that can occur in the near future, the system has chosen HSN widely recognized as the Harmonized System of Nomenclature. In this article, we will know all about the HSN code.

What is the HSN code?

The HSN means the harmonized system of nomenclature.

Wherein, each and every letter of the word HSN has its own word. Have a look

  • H stands for Harmonised
  • S stands for System
  • N stands for Nomenclature

HSN code is a normally uniform six-digit code and which is developed by the world customs organization (WCO) in 1988. The reason for introducing this system to the well-organized arrangement of products worldwide. Almost, What is HSN code more than 5000 products come under the HSN system. 

Importance of HSN Code

The main importance of the HSN code is that it classifies the products in a logical way and systematic manner all over the world. Due to this, expedites international trade in an easy way.

Worldwide HSN

More than 200 country uses the HSN system because for the following reason:

  • Uniform Division of Goods
  • Assist in gathering data related to international trade
  • The base for usage tariffs.

The wares in international trade which are more than 98% are listed in terms of HSN code. Most of the countries are accepted the HSN system for several specialties. Due to the nature of the product, the HSN code differs in some countries What is HSN code. 

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Need HSN in India

Due to the implementation of GST(Goods and Service Tax) in the whole nation, the nation market became unified, but it is also necessary to become a unified market at the international level. HSN code under GST For the uniform organization internationally, HSN code has introduced which is also utilized by India.

Indian manufactured required to follow 3 structures of HSN under the GST regime.

  • Those manufacturers whose turn over less than Indian rupees 1.5 crore does not need to follow HSN
  • Those manufacturers or businesses whose turn-over exceeding rupees 1.5 crores and less than 5 crores rupees will have to required 2 digit HSN code.
  • Those Indian manufacturers whose turnover exceeding rupees 5 Crores will have to needed 4 digit HSN code.
  • 8-digit HSN code requires to follow those dealers or traders who are concerned with imports and export.

Understanding the HSN code with Examples

21 sections, with 99 Chapters, about 1,244 headings, and 5,224 subheadings comes under the HSN code. 

  • Each section is subdivided into chapters. The title of each chapter is divided into headings. Each heading is divided into subheadings.
  • Under the section and chapter titles, all categories of products are explained and the product in detail is explained under headings and subheadings What is HSN code. 

Examples

T-shirt made by manufacturer matters 54.32.96

  • The first two digits (54) describe the chapter number for Articles of garments and clothing accessories.
  • The next two digits (32) describe the heading number for the T-shirt.
  • Finally, the last two digits (96) are the product code for the T-shirt made of other textile substances.

To understand in-depth, India has further classified 2 more digits.

  • If the T-shirt is man-made, then the HSN code is 54.32.96.10.
  • If silk is used to make the T-shirt, then the HSN code is 54.32.96.96.

Goods Classifying Under HSN System

Under the HSN system, there are six rules for classifying the products which are known as the general rules for the interpretation of the harmonized system or general interpretative rules.

Rule 1
  • Titles of sections, chapters, and sub-chapters are provided for the comfort of relating only.
  • Apply headings and sub-headings in a legal way to drive classification.
Rule 2a
  • If the products are incomplete and have the features of the complete product, classification is similar to that of the finished product (if the classification is recognized).
  • The heading shall also cover removed/unassembled or disassembled parts (i.e., SKD/CKD).
Rule 2b
  • Any relating to a material/substance holds a reference to mixtures/combinations of that material or substance with other materials/substances.
  • The division of goods including more than one material/substance shall take place as per Rule 3.
Rule 3a

The specific title of a product will be considered more than the generic title for that product. For example, milk is considered a 0% tax attracting product under GST. But drinks made from milk have a precise HSN 2202 90 30, which attracts a 12% tax under GST, so the specific title for milk drinks here will prevail over the general head of milk.

Rule 3b

Combined or mixed products should be classified according to the material or substance that gives them their required character.

For example, a shaving kit including an electric trimmer (85.10), comb (96.15) and brushes (96.03) inside a leather bag (45.02) should be classified under shaving kit heading (85.10).

Rule 3c

In case two headings are equally suited to the product or goods, choose the heading that comes last in numerical order.

Rule 4

If products cannot be classified according to the above rules, they should be classified according to the product for which they are most relevant.

Rule 5

Containers especially prepared for the article and proper for long-term use shall be classified with that article if such articles are usually sold with such cases. For example, a camera case would be under the cameras.

Packing materials and containers should also be classified with relevant goods, except when the packing is of repetitious use What is HSN code.

HSN Sections

Section Chapter HSN Code List
Section 1 Chapters 1 to 5 Live animals and animal products
Section 2 Chapters 6 to 14 Vegetable
Section 3 Chapters 15 Fats and oil of animals or vegetable
Section 4 Chapters 16 to 24 beverages, vinegar, spirits, and tobacco
Section 5 Chapters 25 to 27 Minerals products
Section 6 Chapters 28 to 38 Chemical and para-chemical products
Section 7 Chapters 39 to 40 Plastic and its articles, rubber and its articles
Section 8 Chapters 41 to 43 Animal hides and skin
Section 9 Chapters 44 to 46 wood, cork, manufacture of straw, and its articles
Section 10 Chapters 47 to 49 Wood, paperboard, paper, and printed products
Section 11 Chapters 50 to 63 Textiles and its articles
Section 12 Chapters 64 to 67 footwear, walking sticks, headgear, umbrellas, prepared feathers, artificial flowers, and articles of human hair
Section 13 Chapters 68 to 70 Stone, minerals, plaster, cement, etc., and ceramic and glass items.
Section 14 Chapters 71 Precious metals and stones
Section 15 Chapters 72 to 83 Metals and its articles (Note: Chapter 77 is reserved for future use)
Section 16 Chapters 84 to 85 Machinery and mechanical appliances, sound recorders and reproducers, electrical equipment, television image and sound recorders and reproducers, and parts and accessories of such articles
Section 17 Chapters 86 to 89 Vehicles, vessels, aircraft, and associated transport equipment
Section 18 Chapters 90 to 92 Cinematographic, photographic, and musical apparatus and accessories measuring surgical, medical, and other instruments and clocks and watches
Section 19 Chapters 93 Arms and ammunition
Section 20 Chapters 94 to 96 miscellaneous manufactured articles
Section 21 Chapters 97 to 99 collector’s pieces, work of arts, and antiques (Note: Chapter 99 is reserved for national use)

Conclusion

Small dealer which comes under the GST composition scheme does not need to mention HSN code in bill/invoice. Whenever GST tax returns and bill are uploaded on the government web portal at that time HSN code does not require to mention. What is HSN code But at the time of doing GST registration, HSN code is needed to mention. Overall, the HSN code plays an important role in the international transaction of goods. people ask for This-

  • what is hsn code under gst
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  • what is the gst rate for hsn code
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  • What are HSN codes in GST?
  • How to calculate GST using HSN code?
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  • how do i find my hsn code in gst
  • What is the purpose of HSN code?
  • HSN codes for Goods and Service Tax (GST) in India

What is HSN code example?

HSN stands for Harmonised System of Nomenclature code. You can use HSN Code For better identification of goods, India and a few other countries use eight-digit codes for deeper classification. For example, 72.02. 99.11 is the HSN code for ferro-phosphorus under other ferro-alloy products.

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