HSN Code List: Its code, Structure, benefits & HSN under GST

The HSN code means "Harmonic System of Nomenclature". This system has been introduced for the systematic classification of goods worldwide with logical understanding.

Transactions of products and goods have been taking place across the country and the world. Thus, there are many differences such as region-wise or country-wise, which do not provide accurate information about the product. The HSN Code gives traders a common understanding of products, regardless of their national and international boundaries.

In this article, we will explain the entire concept of the HSN code. You will understand its uses,  code, structure, benefits & HSN under GST, etc. The purpose of this blog is to make everyone understand HSN code; so that no one gets confused while applying HSN Code in business.

Article Content-

1. The Importance of the HSN Code
2. HSN Code in India
3. HSN Code List of India
4. Indian Goods & Services Tax and role of HSN in it
5. How does HSN work?
6. Understanding the Structure of the HSN Code
7. The benefit of adopting an HSN code system
8. The Importance of HSN Under GST
9. HSN Codes under GST
10. How to avoid mistakes with HSN in GST?
11. FAQs (Frequently Asked Questions)

The Importance of the HSN Code

The HSN code is developed by the World Customs Organization (WCO). The primary vision of the HSN code is a systematic and logical classification of goods all over the World. With Classification, also is used to collect data and avoid any difficulty to obtain successful trading. It is almost successful; used by 200+ countries worldwide. This adoption rate of the HSN says more about the importance of the HSN code in trading.

• It helps in identifying the rate of tax applicable to a product in a country.
• It determines the quantum of product exported or imported in and out of a country.
• It analyzes the movement of goods across the World and country.
• It helps in the collection of international trade statistics.
• It has a provision of a rational basis for Customs tariffs.
• It facilitates uniform classification in the trading system.

With the above-verified facts, almost 98% of goods in the world are classified in terms of HSN. The code exists for each commodity in every country, and the number remains the same for almost all goods. In some cases, the HSN code can vary. It is because that some countries are entirely defining the HSN based on the nature of the items classified.

HSN Code in India

Since 1971, India is a member of the World Customs Organization(WCO). In India, originally 6-digit HSN codes are used to classify commodities for Customs and Central Excise. Also, various Indian states have their own systems for classifying goods for tax rate determination. Later two more digits are added to make the codes more precise. So, now it comes to an 8 digit classification.

HSN Code List of India

Chapter CodeChapter Description

Chapter 01

HS Code for Live animals

Chapter 02

HS Code for Meat and edible meat offal

Chapter 03

HS Code for Fish and crustceans, molluscs and other aquatic invertebrates

Chapter 04

HS Code for Dairy produce; bird's eggs; natural honey; edible products of animal origin, not elsewhere specified or included

Chapter 05

HS Code for Products of animal origin, not elsewhere specified or included

Chapter 06

HS Code for Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage

Chapter 07

HS Code for Edible vegetables and certain roots and tubers

Chapter 08

HS Code for Edible fruit and nuts; peel of citrus fruit or melons

Chapter 09

HS Code for Coffee, tea, mate and spices

Chapter 10

HS Code for Cereals

Chapter 11

HS Code for Products of the milling industry; malt; starches; inulin; wheat gluten

Chapter 12

HS Code for Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder.

Chapter 13

HS Code for Lac gums, resins and other vegetable saps and extracts

Chapter 14

HS Code for Vegetable plaiting materials; vegetable products not elsewhere specified or included

Chapter 15

HS Code for Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes

Chapter 16

HS Code for Prepared foodstuffs; beverages, spirits and vinegar; tobacco and manufactured tobacco substitutes

Chapter 17

HS Code for Sugar and sugar confectionery

Chapter 18

HS Code for Cocoa and cocoa preparations

Chapter 19

HS Code for Preparations of cereals, flour, starch or milk; pastrycooks’ products

Chapter 20

HS Code for Preparations of vegetables, fruit, nuts or other parts of plants

Chapter 21

HS Code for Miscellaneous edible preparations

Chapter 22

HS Code for Beverages, spirits and vinegar

Chapter 23

HS Code for Residues and waste from the food industries; prepared animal fodder

Chapter 24

HS Code for Tobacco and manufactured tobacco substitutes

Chapter 25

HS Code for Salt; sulphur; earths and stone; plastering materials, lime and cement

Chapter 26

HS Code for Ores, slag and ash

Chapter 27

HS Code for Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes

Chapter 28

HS Code for Products of the chemical or allied industries

Chapter 29

HS Code for Organic chemicals

Chapter 30

HS Code for Pharmaceutical products

Chapter 31

HS Code for Fertilizers

Chapter 32

HS Code for Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other coloring matter; paints and varnishes; putty and other mastics; inks

Chapter 33

HS Code for Essential oils and resinoids; perfumery, cosmetic or toilet preparations

Chapter 34

HS Code for Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, “dental waxes” and dental preparations with a basis

Chapter 35

HS Code for Albuminoidal substances; modified starches; glues; enzymes

Chapter 36

HS Code for Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations

Chapter 37

HS Code for Photographic or cinematographic goods

Chapter 38

HS Code for Miscellaneous chemical products

Chapter 39

HS Code for Plastics and articles thereof; rubber and articles thereof

Chapter 40

HS Code for Rubber and articles thereof

Chapter 41

HS Code for Raw hides and skins (other than furskins) and leather

Chapter 42

HS Code for Articles of leather; saddlery and harness, travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut)

Chapter 43

HS Code for Furskins and artificial fur, manufactures thereof

Chapter 44

HS Code for Wood and articles of wood; wood charcoal

Chapter 45

HS Code for Cork and articles of cork.

Chapter 46

HS Code for Manufactures of straw, of esparto or of other plaiting materials; basketware and wickerwork

Chapter 47

HS Code for Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paper board

Chapter 48

HS Code for Paper and paperboard; articles of paper pulp, of paper or of paperboard

Chapter 49

HS Code for Printed books, newspaper, pictures and other products of the printing industry; manuscripts, typescripts and plans

Chapter 50

HS Code for Textiles and textile articles

Chapter 51

HS Code for Wool, fine or coarse animal hair; horsehair yarn and woven fabric

Chapter 52

HS Code for Cotton

Chapter 53

HS Code for Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn

Chapter 54

HS Code for Man-made filaments; strip and the like of man-made textile materials

Chapter 55

HS Code for Man-made staple fibres

Chapter 56

HS Code for Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof

Chapter 57

HS Code for Carpets and other textile floor coverings

Chapter 58

HS Code for Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery

Chapter 59

HS Code for Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use

Chapter 60

HS Code for Knitted or crocheted fabrics

Chapter 61

HS Code for Articles of apparel and clothing accessories, knitted or crocheted

Chapter 62

HS Code for Articles of apparel and clothing accessories, not knitted or crocheted

Chapter 63

HS Code for Other made up textile articles; sets; worn clothing and worn textile articles; rags

Chapter 64

HS Code for Footwear, gaiters and the like; parts of such articles

Chapter 65

HS Code for Headgear and parts thereof

Chapter 66

HS Code for Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding crops and parts thereof

Chapter 67

HS Code for Prepared feathers and down and articles made of feathers or of down; artificial flowers; articles of human hair

Chapter 68

HS Code for Articles of stone, plaster, cement, asbestos, mica or similar materials

Chapter 69

HS Code for Ceramic products

Chapter 70

HS Code for Glass and glassware

Chapter 71

HS Code for Natural or cultured pearls, precious or semi-precious stones, precious metal, metals clad with precious metal, and articles thereof; imitation jewellery; coin

Chapter 72

HS Code for Base metals and articles of base metal

Chapter 73

HS Code for Articles of iron or steel

Chapter 74

HS Code for Copper and articles thereof

Chapter 75

HS Code for Nickel and articles thereof

Chapter 76

HS Code for Aluminium and articles thereof

Chapter 77

HS Code for Reserved for possible future use

Chapter 78

HS Code for Lead and articles thereof

Chapter 79

HS Code for Zinc and articles thereof

Chapter 80

HS Code for Tin and articles thereof

Chapter 81

HS Code for Other base metals; cermets; articles thereof

Chapter 82

HS Code for Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal

Chapter 83

HS Code for Miscellaneous articles of base metal

Chapter 84

HS Code for Machinery and mechanical appliances; electrical equipment; parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers; and parts and accessories of such articles

Chapter 85

HS Code for Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers and parts and accessories of such articles

Chapter 86

HS Code for Vehicles, aircraft, vessels and associated transport equipment

Chapter 87

HS Code for Vehicles other than railway or tramway rolling - stock, and parts and accessories thereof

Chapter 88

HS Code for Aircraft, spacecraft and parts thereof

Chapter 89

HS Code for Ships, boats and floating structures

Chapter 90

HS Code for Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof

Chapter 91

HS Code for Clocks and watches and parts thereof

Chapter 92

HS Code for Musical instruments; parts and accessories of such articles

Chapter 93

HS Code for Arms and ammunition; parts and accessories thereof

Chapter 94

HS Code for Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishing; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildin

Chapter 95

HS Code for Toys, games and sports requisites; parts and accessories thereof

Chapter 96

HS Code for Miscellaneous manufactured articles

Chapter 97

HS Code for Works of art, collectors' pieces and antiques

Chapter 98

HS Code for Project imports; laboratory chemicals; passengers' baggage, personal implementations by air or post; ship stores

Indian Goods & Services Tax and role of HSN in it

Let’s get more insight into the HSN concept and move on to understanding HSN from the Indian context.

With the introduction of the Goods and Services Tax (GST) regime, it becomes a necessity to establish a more uniform classification for both the national or international levels. Hence, two types of systems are in use. One is Harmonised System of Nomenclature (HSN) system for goods and the other is Service Accounting Code (SAC) system for services.

India is all set to have its very own Goods & Services Tax for all goods and services alike. It comes with one taxation system concept and reduces the burden on the end taxpayer. India has already been using the HSN system of 6-digit since 1986. But after GST compliance, now added another two digits to the 6-digit structure. The following is the required information for HSN.

• Those with a turnover of less than INR 1.5 Crores need not follow HSN
• Those with a turnover exceeding INR 1.5 Crores but less than INR 5 Crores shall be using the 2 digit HSN codes
• Those with a turnover exceeding INR 5 Crores shall be using the 4 digit HSN codes
• Those dealers who are into imports or exports shall mandatory follow the 8 digit HSN codes

How does HSN work?

HSN is supported by well-defined rules and accepted worldwide. HSN classification is very helpful to identify the tax rate applicable to a specific product/goods in a country. Thus, it has a great place in the taxation system. This also applies to imports and exports. In this way, it helps to determine the quantity of all goods imported or traded through any country and gives an analysis.

Understanding the Structure of the HSN Code

The structure of the HSN code contains- Sections, Chapters, Headings, and Sub-headings.

Each Section is divided into Chapters. Each Chapter is divided into Headings. Each Heading is divided into Sub Headings.

The HSN code contains:

1. 21 sections.
2. 99 chapters.
3. 1244 headings.
4. 5224 subheadings.

• Each Chapter is named as a two-digit HSN number.
• Each two-digit HSN number is sub-classified into a four-digit HSN code.
• Later, such four-digit HSN codes are further sub-classified into the six-digit HSN code.
• Those dealers who are into imports or exports shall mandatory follow the 8 digit HSN codes

Example:-

Here, I am taking an example of Handkerchief HSN code (62139010) made of man-made fibers.

In the above HSN code - 62139010

• The first two digits (62) represent the chapter number for Articles of apparel and clothing accessories.
• The next two digits (13) represent the heading number for handkerchiefs.
• The next two digits (90) are the product code for handkerchiefs made of other textile materials.
• Finally, the last two digits (10), represent the handkerchiefs are made from man-made fiber.

Note:- The last two digits are for deeper classification, which is mainly applicable in India.

The benefit of adopting an HSN code system

• Goods and offerings are globally acceptable
• The identification of goods becomes easy
• Possibilities of misinterpretation tend to reduce

The Importance of HSN Under GST

• The HSN codes make the GST taxation regime systematic and globally accepted.
• It eliminates the need of putting the detailed description of the products in the tax receipt.
• It saves time and effort and makes return filing easy.
• In GST filing, it is required for the dealer to provide an HSN/SAC-wise summary of sales in his GSTR-1.

HSN Codes under GST

Under GST law, the HSN code to be used by a taxpayer for the classification of goods. It will be based on the taxpayer's turnover. The HSN code needs to be declared on the tax invoice. It is also required while filing the GST returns. The draft list of HSN codes released and available in the public domain. Also, it can be assessed on the government GST website.

2-digit HSN code for goods

The taxpayers with turnover between Rs. 1.5 crore and Rs. 5 crores in the preceding financial year, need to specify HSN codes only at the 2-digit chapter level.

3-digit HSN code for goods

The taxpayers with a turnover of more than Rs. 5 crores in the preceding financial year, need to specify HSN codes of 4-digits.

8-digit HSN code for export and import of goods

The HSN codes of 8 digits are mandatory in the case of taxpayers' exported and imported goods.

How to avoid mistakes with HSN in GST?

One of the smart ways to avoid making mistakes with your HSN information when filing a GST is to use software systems that strengthen GST capability with a fixed HSN code feature. In this way, you can automatically generate GST-compliant invoices with every transaction, without any HSN code mistake.

FAQs (Frequently Asked Questions)

Has the Government informed about HSN Codes?

Yes. The draft list of HSN codes released and available in the public domain. Also, it can be assessed on the government GST website.

Is the HSN code required for all dealers?

No. It is not required for all dealers. The dealers who have an annual turnover of less than INR 1.5 Crores are not eligible for the HSN code. Also, the dealers registered under the Composition Scheme of GST are exempted from the usage of HSN Codes.

Why is it necessary to follow HSN Codes in business?

HSN gives a systematic and logical way of classification, thereby reducing the chances of any misinterpretations in the trading system.

Why are HSN Codes important at the time of filing GST returns?

GST return is fully automatic. This is the reason that it becomes difficult for the dealers to upload full details of the products being supplied. Therefore, the HSN code can be automatically taken from the dealer's registration details, and unnecessary effort is employed.