HSN (Harmonised System of Nomenclature) codes are internationally standardised numerical codes used to classify goods under GST. Getting the HSN code right is critical — it determines your GST rate, affects invoice validity, and wrong codes can trigger demand notices. This guide explains the entire HSN code system clearly.
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1. What is an HSN Code?
HSN is an internationally accepted system developed by the World Customs Organization (WCO) for classifying goods. Under GST, every goods invoice must mention the correct HSN code — this code determines the applicable GST rate. Services use SAC (Services Accounting Code) instead.
2. HSN Code Structure
Example: Cotton T-shirt — HSN 61091000
| Digits | Level | Meaning (Cotton T-shirt) |
|---|---|---|
| 61 | Chapter | Articles of apparel, knitted or crocheted |
| 6109 | Heading | T-shirts, singlets and other vests, knitted or crocheted |
| 610910 | Sub-heading | Of cotton |
| 61091000 | Tariff item | Full 8-digit classification |
3. When is HSN Code Mandatory on Invoices?
| Annual Turnover | HSN Digits Required |
|---|---|
| Up to ₹5 crore | 4-digit HSN code |
| Above ₹5 crore | 6-digit HSN code |
| Exporters (all turnover) | 8-digit HSN code |
| Composition dealers | Not required on Bill of Supply |
4. How to Find the Right HSN Code
- Go to gst.gov.in → Services → User Services → Search HSN Code
- Type your product name and browse the results
- Select the most specific classification at 6-digit or 8-digit level
- Alternatively use cbic-gst.gov.in → GST Rate Finder (shows rate directly)
Use the material/composition of the product, not just the common name. When in doubt between two codes, choose the more specific one.
5. Common HSN Codes in India
| Product | HSN Code | GST Rate |
|---|---|---|
| Mobile phones | 8517 | 12% |
| Laptops / computers | 8471 | 18% |
| Cotton fabric | 5208 | 5% |
| Ready-made garments (above ₹1,000) | 6101–6117 | 12% |
| Footwear (above ₹1,000/pair) | 6401–6405 | 18% |
| Plastic goods | 3901–3926 | 18% |
| Iron and steel products | 7201–7326 | 18% |
| Medicines/drugs | 3001–3006 | 5–12% |
| Packaged food | 1601–2106 | 5–12% |
6. SAC Codes for Services
| Service | SAC Code | GST Rate |
|---|---|---|
| CA / accountancy services | 998211 | 18% |
| Legal services | 998211 | 18% |
| Software development | 998313 | 18% |
| Restaurant services | 9963 | 5% (no ITC) |
| Hotel accommodation (above ₹7,500) | 9963 | 18% |
| Transport of goods by road | 9965 | 5% / 12% |
| Health care services | 9993 | Exempt |
7. Consequences of Wrong HSN Code
- Wrong GST rate: Under-declared tax creates demand + interest + penalty
- ITC rejection: Buyer's ITC claim may be rejected if your HSN is wrong
- GSTR-1 mismatch: HSN summary mismatch triggers scrutiny notice
- E-way bill errors: Wrong HSN in e-way bill can lead to goods detention in transit
8. HSN Summary in GSTR-1
GSTR-1 Table 12 requires HSN-wise summary of outward supplies. For turnover above ₹5 crore: 6-digit level. Common errors: total taxable value in HSN summary not matching supplies, same HSN with different rates not reported separately, exports without 8-digit HSN.
Disclaimer: This article is for general informational and educational purposes only. It represents our professional views as Chartered Accountants. This content should not be construed as legal or tax advice. Tax laws are subject to change with each Union Budget. For advice specific to your situation, please consult our experts directly.
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