The Harmonized System of Nomenclature, or HSN Code, was established to categorises commodities and gives them a distinct identity. The world is thriving as a result of global trade and e-commerce. Trading was challenging because of the availability of a plethora of goods on a global scale. Before we show you how you can find your product’s HSN code online, let’s discuss in detail what HSN Codes are.
“Harmonized System of Nomenclature” is abbreviated as HSN code. This method was developed to allow for commodities’ global, systematic classification. A 6-digit universal identifier called the HSN code, which categorises more than 5000 products, is used worldwide. The World Customs Organization (WCO) created it, which went into effect in 1988.
HSN Code – Their Importance
Since the HSN Code is an internationally recognised certification standard, all nations employ the same first six digits. However, in order to further categorise items, some nations have increased the number of digits in their HS Code schemes. For instance, the US utilises HTS Codes, often known as the Harmonized Tariff Schedule, which have a 10-number classification, but India employs 4, 6, and 8-digit classifications.
It has over 5,000 product categories organised into a logical and legal structure, each of which is identifiable by a six-digit code. To ensure a uniform categorization, it is backed by well-defined rules. Basically, HSN’s principal goal is to logically and systematically categorize products from all over the world. This improves international trade by bringing about a standard categorization of goods and commodities.
What is the need for an HSN code?
HSN Code is a sensible approach to categorizing items for domestic and international commerce because it is an essential criterion recognized internationally for product classification.
This code can be used in a much more effective way to gather information and comprehend international and domestic trade that is occurring both inside and outside the nation. This code assists the government in making macroeconomic decisions concerning the sale of certain commodities.
Check Here To More About:https://services.gst.gov.in/services/searchhsnsac
HSN in a Global Platform
The HSN is used to categorise almost 98% of the goods traded internationally. Most nations accept the Harmonized System of Nomenclature number for every commodity. For practically all products, the HSN number stays the same. However, depending on the type of commodities categorised, the HSN number used in a few nations differs just a little. More than 200 nations and economies use the HSN Coding system for a mix of factors, including:
- A unified classification of goods
- Collection of global trading statistics
- The base for customer prices
HSN Scheme in India
Since 1971, India has belonged to the World Customs Organization (WCO). Commodities were previously categorised for Customs and Central Excise with 6-digit HSN codes. Subsequently, two more digits were added by Customs and Central Excise to the codes to increase their specificity, giving the categorisation an 8-digit number.
The ITC-HS Codes are required for exporting. The 8-digit HSN Code must be included on the shipment bill in order for the export incentives to apply; otherwise, the benefits of exports shall not ensue. For firms with a revenue of fewer than ₹1.5 crores, or if the merchant is licensed under the GST Composition Scheme, HSN Codes are not mandated under the GST Act. For businesses engaged in exports and requiring a GST certificate online, completing the GST registration process accurately is crucial to ensure eligibility for export incentives and compliance with regulatory requirements.
Understanding the HSN Code’s Structure & Bifurcation
It’s now time to comprehend the HSN code in regards to its categorisation after going through the fundamentals of the HSN code in the above sections. HSN Code is divided into various categories, such as –
- With 21- Sections
- About 99 – Chapters
- With 1244 – Headings
- And around 5224 – Subheadings.
Basically, the 99 chapters that make up the HSN code structure are further divided into 21 groups. There are 1244 headings in these chapters. 1244 headings are made up of 5224 subheadings in total. Let’s delve deep into the categorisation of the HSN code to understand how the digits are arranged in the code fully. Using a random HSN Code, such as 40 09 02 90, we can determine what these digits imply:
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- The chapter is represented by the first two digits of the code, i.e. 40;
- The chapter headers are represented by the following two digits of the code, 09, which come after them;
- The following two numbers, 02, represent the HSN code’s subheadings.
- The product’s price heading is subclassified by the next two digits, 90, which is vital for commercial reasons.
All thanks to the HSN coding system, people can save time and money, especially when using the GST taxation schemes.
How to Find HSN Codes?
Finally, coming back to the central idea of this blog, we will now reveal how you can easily find the HSN code of your products. If you’re searching for an HSN code associated with a particular item, you can simply search for it on the GST Council’s official website. It has a segment on GST HSN codes in particular, in which you can search for the code or item you need.
- Visit the Goods and Service Tax Council’s official website
- You can find a section titled “Overview” on the right side of the screen
- Click on “HSN/SAC/GST Rate Finder” in the overview section, which is the third subsection
- You’ll be taken to a different page that lists the heading & subheading for each commodity as well as their GST rates
- You can either enter the product name directly to receive the corresponding HSN code, or you can browse down the list of goods to see the code
- You will then receive a wide range of information about the searched product, including the product’s heading & subheading, its description, its GST, SGST/UTGST, IGST, & compensation cess rates.
To make it easier for you, here are two ways to find the HSN codes for products –
By the name of the product
You can enter the product name in the search box to obtain more information about that particular item. You will then get appropriate recommendations for the applicable HSN Codes’ first four digits. If you don’t find the right one, select ‘Search’ to get all options. Once the linked code has been located, click it to obtain the 4-digit, 6-digit, or 8-digit HSN codes. You will then have access to the needed information that’s necessary for trading, along with their correct GST rates.
By the product’s HSN codes
You can also enter the product’s HSN Code, which might be 2 or 4 digits long, to acquire more information on the item. By clicking on it, you’ll get the desired outcome and gain access to additional data related to the product.
The importance of HSN Codes under the GST Act
HSN codes are used to make GST standardised and widely recognised. HSN codes will eliminate the requirement to supply a piece of thorough product information. Since GST returns are computerised, this will save time and simplify filing.
Number of digits for HSN Codes to be declared up to 31 March, 2021 –
- Till ₹1.5 crores – 0
- Between ₹1.5 crores – ₹5 crores – 2
- Above ₹5 crores – 4
Conclusion
The introduction of this distinctive Harmonized System of Nomenclature altered the entire landscape of international trade. Finding the appropriate rates is simple, thanks to the HSN Code linked to the goods. Furthermore, it streamlines the trader’s work, whether the trade is meant for domestic or international purposes. If you need more information related to HSN codes, you can get in touch with the legal experts of Vakilsearch. Our expert legal professionals will ensure that all your queries related to this are solved in time.