All you need to know about the GST HSN code
The reason why the Goods & Service Tax regime of India is commended by other nations is that is framed and implemented in a systematised manner. Precision and uniformity are 2 key aspects of India’s GST regime that make it an exemplary model for many other developing nations. One such salient feature that justifies this fact is of HSN code.
All ‘goods’ (tangible items) under GST are given a unique HSN code.
- HSN codes are given to each & every category goods as to eliminate the need to upload the detailed description of that particular category of goods. This HSN code is used in various types of GST compliance such as E-waybill, LUT registration and GST return filing procedure.
- Every manufacturer or a trader who has a GST registration is required to mention the HSN code of the goods he supplies, in his GST invoice and in various types of GST returns.
#1. What is an HSN code?
HSN is an acronym for “Harmonized System of Nomenclature”. It is also referred to as Harmonized Commodity Description. This is a multipurpose international Coding System developed by the World Customs Organization (WCO). It was first brought into effect in 1988.
#2. Why is HSN required under GST?
The main purpose of HSN codes is to make India’s GST structure a completely systematic, orderly and globally accepted indirect tax regime. No wonder, the GST structure is really praised by many developed nations. As discussed above, the HSN codes are used in various compliance procedures such as-
- E-waybill creation
- GST return filing procedure
- LUT registration
- GST invoicing process
And so on
#3. How does HSN code help in GST Return Filing?
As mentioned above, the HSN codes remove the need to furnish the entire description of the goods every time when filing various types of GST returns. This ultimately saves time and makes GST Return Filing process extremely easy since the details of goods are entered in an automated manner by entering their HSN codes.
#4. Who is required to show the HSN code?
Any dealer or a manufacturer who has a GST registrationâ€‹ is supposed to provide HSN code-wise summary of his entire sales in his GSTR-1 if his turnover exceeds the slab, i.e. â‚¹ 20 lakhs.
#5. What is the system for HSN code?
The HSN structure comprises of 21 sections, 99 Chapters, 1,244 headings, and 5,224 subheadings.
- Each Section has been divided into Chapters. Each Chapter is further categorized into Headings. Each Heading is classified into Sub-headings.
- Section and Chapter denote the main categories of goods, while headings and subheadings give detailed product description.
#6. What is the structure of an HSN code?
To understand the structure of an HSN code, let’s take an example of HSN code of, say, the Broomsticks (jhadoo)- 960330
- The first 2 digits (96) depict the chapter number for Articles of brooms other than those consisting of twigs or other vegetable raw-materials tied together, with or without handles.
- Next 2 digits (03) denote the heading number for brooms.
- Finally, last 2 digits (30) is the product code for broomsticks made of twigs or other vegetable raw materials.
Now, in India 2 more digits are added for a more detailed description. For instance,
- If the broomsticks were made of a man-made raw material, then the HSN code will be 96033010.
- If the broomsticks were made of a natural raw material, then the HSN code will be 96033090.
With that, you can truly familiar with the concept of HSN code under GST.
Now, if you need any sort of guidance regarding GST registration in India or GST return filing online, feel free to contact us at 8881-069-069.