HSN Code (Harmonized System of Nomenclature)

A standardized international system for classifying traded goods, used in India for GST rate determination and invoice compliance.

HSN (Harmonized System of Nomenclature) is a globally standardized system developed by the World Customs Organization (WCO) for classifying goods. In India, HSN codes are mandatory on GST invoices and determine the applicable GST rate.

HSN code structure:

  • 2-digit: Chapter (broad category, e.g., 61 = knitted garments)
  • 4-digit: Heading (specific category, e.g., 6109 = T-shirts)
  • 6-digit: Subheading (detailed classification)
  • 8-digit: Indian tariff item (India-specific extension)

HSN requirements on GST invoices:

  • Turnover up to Rs. 5 crores: 4-digit HSN code required
  • Turnover above Rs. 5 crores: 6-digit HSN code required
  • For exports and imports: 8-digit codes are mandatory

Incorrect HSN codes can lead to wrong GST rates being applied, ITC mismatches, and e-invoice validation failures. Businesses should maintain a validated HSN master for all their products.

Related Terms

SAC Code (Services Accounting Code)

A classification code used for services under GST in India, similar to HSN codes for goods, to determine applicable tax rates.

E-Invoice (Electronic Invoice under GST)

A system where B2B invoices are electronically authenticated by the GST Invoice Registration Portal (IRP) before being issued.

GSTIN (Goods and Services Tax Identification Number)

A unique 15-digit alphanumeric code assigned to every registered GST taxpayer in India.

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