The 8-digit HSN code is the key to understanding GST rates. It is a code used to identify and classify goods and services. This code is used by businesses and government agencies to ensure that the correct GST rate is applied to goods and services. The code is also used to determine the eligibility of goods and services for certain GST concessions and exemptions. Here's a complete guide to what it is and how it works.
The 8-digit HSN code, sometimes called the HSN2, or HSN3 code, determines your tax rate when selling goods and services in Singapore. Here’s a guide to understanding this 8-digit code and how it relates to the GST rate you charge on your products or services. Keep reading further in this guide as we discuss everything about the 8-digit HSN code.
The 8-Digit HSN Code Structure
HSN Codes are a type of product classification or classification scheme. In other words, they are a system for categorising goods and services by type. The 8-Digit HS Code Structure includes:
- A two-digit country code.
- Six digits describe the product or service.
- A check digit.
Excerpt Chapter 91, there will be no blanks in an HSN code. So, for example, a 7-digit HS Code such as 09 would indicate Chocolate & Cocoa products.
Understanding The HS Code In India
HSN Code: The HS Code, or Harmonised System Code, is an internationally recognised coding system for goods in which each number and letter corresponds to different product classification. India uses it primarily as a tax coding system and classifies goods into different categories based on their tariff lines. The first two digits represent the HS chapters, while the last six represent specific products. For example, if you’re importing motor vehicles with engines of 50cc or less (chapter 87), the 4-digit code would be 8701. If you’re importing other car parts classified under chapter 39 (tires and tubes) (subheading 3922.30), then the four-digit code would be 3922.309940.
Assigning Product Codes By Industry Category
To simplify reporting, TIR has assigned product codes by industry category. For example, new tires are considered automotive, while a gallon of maple syrup falls under food. You must classify your products correctly, so you don’t underpay or overpay on your GST/HST return.
Why Is HSN Important Under GST?
HSN codes are important under GST because they help guide how much GST you need to charge on an item. For example, there are five different HSN codes for Cell Phones listed as taxable goods in the Goods and Services Tax Act. The first four items have a 12% GST rate, but the fifth one has a 5% GST rate. Therefore, under GST, when you sell a product that includes more than one HSN code (e.g., an iphone with both mobile phone and music player functions), it’s important to determine the correct GST rate based on which features are being used or sold for the price being charged.
How Does An HSN Code Work?
HSN codes are eight digits long, each with a specific meaning. HSN codes are designed to be used by businesses to classify their products for purchase or resale. This classification can be for pricing purposes, product descriptions, or inventory purposes. Governments and other agencies also use HSN codes to collect taxes and customs duties on imported goods.
The first two digits of an HSN code will tell you what type of good it is. The third digit tells you what industry sector it belongs to, while the fourth and fifth numbers will tell you which subsector it falls into. A zero indicates that it’s not a final product; if the last four numbers are all zeros, then it’s not classified under any of these categories. For example, 293110 – cocoa beans (cocoa bean curd). First, cocoa beans fall under industrial goods, then chocolates come under food manufacturing, and finally, cocoa beans themselves would be classified as ‘beans’.
Check Here To More About:https://services.gst.gov.in/services/searchhsnsac
How the 8-digit HSN Code lists with GST Rate?
The 8-digit HSN code lists with GST rates are an important part of the product listing. These codes make it easier for buyers and sellers to understand the tariff or duty. The 8-digit HSN code lists with GST rates are usually broken down into six groups: Clothing, Footwear, Textiles, Home Furnishings, Furniture and Toys.
Advantages Of An HSN Code
HSN codes provide an easy and consistent way of identifying all products and services. They are also unique for every company, so you can use them to monitor your inventory. One of the advantages of HSN codes is that one can use them both for accounting purposes and tax calculations. HSN codes are also free.
The only thing you need to do to get one is to fill out a simple application form with your company’s information. As mentioned, HSN codes are compatible with different systems, including accounting software such as MYOB or Xero and tax software such as Quickbooks or TurboTax.
Another great advantage of this system is that it provides accurate detail about the items sold at any time. You will be able to see how many items have been sold, what prices they were, and what discounts have been applied (if any). There are so many advantages of HSN codes and their usage in business.
For example, they help maintain stock levels while providing fast access to accurate data on your sales. Moreover, if you want to export data from the system into Excel, there is no problem as everything is done using an open file format called XML. You need a spreadsheet program like Microsoft Excel or LibreOffice Calc installed on your computer. Overall, we think that HSN codes are an effective tool for managing your inventory.
Conclusion
In conclusion, the 8-digit HSN code is a unique identifier that one can use to determine various aspects of the product, such as its rate of GST. The first two digits specify the country where it was manufactured. While the next six specify specific codes for each product type. Find HSN Code and GST Rate here.
Vakilsearch is a company that provides legal services for financial contracts. They are well known for their law-related services. However, one of the most important aspects of Vakilsearch is that they have an excellent customer service team who are always available to answer any queries or concerns you might have. Vakilsearch has been around for many years and is one of the best law firms in India. They offer a wide variety of services to their clients, from financial contract drafting to GST rate calculations. Get in touch with them today!
Read more,
