What is HSN Code?, and Information on GST HSN Code

Introduction

This article will cover all the necessary information on what is HSN code, Gst HSN Code list, HSN Code full form, and other information on GST HSN Code. GST taxpayers having a turnover of more than Rs 5 crore would be required to provide a six-digit HSN or tariff number on invoices issued for supplies of taxable goods and services, according to the Ministry of Finance. Since April 1, 2021, the rule has been in effect. Before moving towards GST HSN Code List, let’s have a quick look on “what is GST (Goods and Service Tax)?”

What is GST?

GST stands for goods and service tax. The goods and services tax (GST) is a value-added indirect tax levied on most goods and services sold for domestic consumption. The GST is paid via GST Return by consumers, but it is remitted to the government by the businesses selling the goods and services.

What is HSN Code?

HSN Code full form is Harmonized System of Nomenclature. This system was created for the purpose of categorizing things in a methodical manner all across the world. The HSN code is a six-digit universal number that categorizes over 5000 products and is accepted all across the world. The WCO (World Customs Organization) created it, and it went into operation in 1988.

Advantages of HSN Code

HSN Code is beneficial for every legal entity that is engaged in trading activity. Below are the points that will explain why HSN Code is important:

• It will help in maintaining uniformity in the taxation system around the globe.

• It will be easy at the time of filing ITR (Income Tax Return), invoices, and other filings.

• HSN code will help in classifying goods around the globe by Central Excise Department and Consumer.

• HSN Code will help in achieving ease of doing business internationally.

Information on “How Does GST HSN Code List works?”

The GST HSN Code is mainly used by the traders and dealers, there are different types of HSN Code such as 2 digit code, 4 digit code, and 8 digit code. Dealer/ traders can select any of the given codes based on their business activity.

Information on GST HSN Code List

FAQs on HSN Code

1. Is it necessary to include the HSN Code on the Invoice?

HSN Codes are used by taxpayers to classify their items when filing GST Returns. If a dealer’s or taxpayer’s annual revenue exceeds 1.5 crores, he or she must include the HSN Code in the invoice; otherwise, it is not required to include the HSN Code on taxable invoices.

2. If my business turnover is more than 5 crore, which HSN Code is required?

If your business turnover is more than 5 crore then you need to apply for 4 digit HSN Code for the business activity.

3. Why GST HSN Code is Important?

HSN Code main goal is to organize and classify commodities from all over the world in a logical and systematic manner. This facilitates international trade by bringing in a uniform classification of items.

4. What is the HSN Code and how does it work?

It contains around 5,000 commodity categories, each of which is recognized by a six-digit identifier and is organized in a legal and logical manner. To achieve uniform classification, it is supported by well-defined norms.

5. For every country HSN Code is same?

The World Customs Organization established the HSN (Harmonized System of Nomenclature). The goods are classified using HSN codes. All of the countries that are part of the WCO have comparable HSN codes. They utilize a six-digit HSN number for items, however, some countries use an eight-digit code to sub-classify products.

Conclusion

GST, India’s greatest tax reform, went into effect on July 1, 2017. The Goods and Services Tax (GST) introduced the internationally recognized HSN Codes into Indian Trade. The implementation of HSN Code will help business in the ease of doing trade worldwide, along with that HSN Code contribute in the ease of doing business Internationally.