HSN/SAC Code and GST Rate Finder

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HSN Code

Harmonized System of Nomenclature or HSN is a multipurpose, globally accepted product nomenclature system that was developed by World Customs Organization. The concept of Harmonized Commodity Description and Coding System (generally referred to as ‘Harmonized System of Nomenclature’) was primarily envisioned to ensure that GST invoicing methodologies, strategies, and practices are in absolute agreement with international standards of product nomenclature.

Significance of HSN Code

As organizations involved in any sort of commercial transactions deal into various goods/services, it becomes quite a cumbersome task for governing bodies as well as business entities to categorize them as per the applicable GST rates. That’s the reason, the government has appointed several GSPs and ASPs to design GST software that can simplify the tax-related processes including GST rates. Herein, the usage of harmonized system of nomenclature can help you classify all the goods and services as per the applicable GST rates in an immaculate manner.

Once a business firm has mentioned correct HSN codes of all the goods and/or services it has been dealing into, it becomes quite hassle-free task for the GST ecosystem to allocate the appropriate tax rate(s) for each commercial transaction automatically. Thus, HSN code facilitates efficient and immaculate management of all the compliance-related activities.

How to find applicable GST rates?

GST system in India is four-tiered taxation structure, and these slabs are fixed at 5%, 12%, 18%, and 28%. While commodities associated with daily needs would attract 5% GST, there are various luxury items and sin goods that would attract 28% GST in conjunction with cess as well. Additionally, some of the staple foods are placed under the 0% tax brackets. That’s why, it becomes somewhat multifaceted, error-prone job to find the correct applicable GST rates for any product.

Herein, our highly-acclaimed GST rate finder can be quite helpful to find the correct applicable GST rates for any goods/services. It can help you find the correct GST rates for any commodity/service by simply typing the name of the commodity/service. Yes, that’s how simple it is!

How to use the HSN codes?

There are three different types of HSN codes that a dealer can use under GST regime, and those are two-digit HSN codes, four-digit HSN codes, and eight-digit HSN codes. The usage of these HSN codes varies as per the dealer’s financial records in the previous financial year.

According to the GST Act India:

  • If the annual turnover of a dealer is less than INR 1.5 crores, then that dealer is not required to use HSN codes while generating invoices and/or filing returns.
  • If the annual turnover of a dealer is between INR 1.5 crores and INR 5 crores, then that dealer is required to use two-digit HSN codes for commodities while generating invoices and/or filing returns.
  • If the annual turnover of a dealer is equal to or more than INR 5 crores, then that dealer is required to use four-digit HSN codes for their invoices.
  • For any commercial transaction involving another country (import or export of goods and services) in the GST era, the usage of eight-digit HSN codes is compulsory as such invoices have to be in agreement with globally-accepted invoicing practices and standards.
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