How can I find my product in HSN list and its relevant HSN Code?

To find out HSN or SAC codes for respective goods or services, go to the ministry’s website and open the list for GST Rates for Goods and GST Rates for Services. QuickBooks Accounting Software provides HSN/SAC Rate Finder to search for the relevant HSN or SAC Codes.

What type of businesses are not required to use HSN code while selling their goods?

Businesses having an annual turnover of less than Rs 1.50 Crores in the preceding financial year are not required to mention the HSN Code in the invoices issued by them for supply of goods undertaken by them.

How many codes are businesses required to mention on the invoice?

Businesses having an annual turnover of more than Rs 5 Crores in the previous financial year are required to use 4 digit HSN Codes for the commodities sold by them.

Further, dealers having an annual turnover of more than Rs 1.50 Crores but less than Rs 5 Crores are required to use 2 Digit HSN Codes in their invoices for the goods supplied by them.

Lastly, businesses having an annual turnover of less than Rs 1.50 Crores are not required to mention HSN Code in their invoices for the commodities sold by them.

However, businesses undertaking import or export of goods are required to mention the complete 8 Digit HSN Codes necessarily. This is done so as to comply with the international standards and practices.

How are products classified under HSN code?

The HSN Code Structure is divided into various sections, chapters, headings and sub-headings. Thus, the HSN Code structure contains 21 sections, 99 Chapters, around 1,244 headings and 5,224 sub-headings in total.

Each section has a number of chapters that set out codes for a specific class or category of goods.

Then, each of the chapters and sub-chapters contain particular class of goods that relate with the nature of goods of its Section.

Finally, every Chapter is divided into a number of heading and sub-headings. These headings and subheadings depend upon the various types of goods covered under each Chapter.

Why is HSN important under GST?

Under GST, the return filing is completely automated. Therefore, it will be quite challenging for taxpayers to upload the description of the commodities supplied by them.

So to avoid such a challenge, the HSN Code System was introduced. Under this system, the HSN Codes are automatically picked up from the registration details of the taxpayer.

Hence, there is no need for the registered taxpayer to upload the detailed description of the commodities sold by him. This will save time and make GST Return filing easy.

Therefore, a dealer or a service provider must upload HSN or SAC wise summary of goods or services sold in GSTR-1. This needs to be done in cases where the annual turnover of the dealer or the service provider falls under the relevant slabs mentioned above.

Where should the HSN/SAC code be mentioned?

Under the GST regime, each invoice issued by a supplier of goods or services must have the relevant HSN for the commodities supplied or SAC Code for the services rendered.

Thus, every dealer or service provider must be aware of the HSN Code List as well as SAC Code List for all the goods or services that they are dealing in and on which GST is applicable.