HSN Code: Full Form, Meaning, & GST Rate Slabs
TL;DR - Summary
- What is an HSN code? - HSN stands for Harmonized System of Nomenclature. It classifies goods using the WCO’s international Harmonized System, used by more than 200 countries and economies.
- Why is an HSN code important? - It helps identify goods for tax invoices, GST returns and customs. Check the product description and current rate notification too: an HSN code alone does not settle every GST rate.
- What is the structure of an HSN code? - An HSN code in India follows an 8-digit hierarchical format made up of the chapter (digits 1–2), heading (digits 3–4), sub-heading (digits 5–6), and tariff item (digits 7–8).
- What is the applicability of an HSN code under GST? - Based on the preceding financial year’s aggregate turnover, businesses up to ₹5 crore need 4 digits on B2B tax invoices and may omit them on B2C invoices. Above ₹5 crore, 6 digits are required on both. Goods customs declarations use India’s 8-digit tariff codes; services use SAC codes.
What Is an HSN Code? Full Form & Meaning
HSN stands for Harmonized System of Nomenclature. It is based on the Harmonized System (HS), developed by the World Customs Organization (WCO) to classify goods for customs, taxation and trade in more than 200 countries and economies.
In India, HSN codes are used under the Goods and Services Tax (GST) system to classify goods on tax invoices and returns. Read the code alongside the product description, conditions and current GST rate notification.
For example, Basmati rice is classified under 10063020. Its GST treatment also depends on the applicable notification, including conditions such as whether the rice is pre-packaged and labelled.
⚠️ COMMON MISCONCEPTION
Service exporters and freelancers use Services Accounting Codes (SAC), not goods HSN codes. Full SAC codes have 6 digits and begin with 99. GST invoice digit requirements depend on the preceding financial year’s aggregate turnover and whether the customer is registered.
What Is the Importance of HSN Code?
An HSN code gives your goods a common classification for tax invoices, GST returns and customs documents. Using the right code helps you check the applicable rate, avoid reporting errors and reduce customs queries.
- Standardized taxation: After the September 2025 changes, 5% and 18% are the main GST rates, with 40% on selected goods. Exemptions and special rates also apply. Match your product’s code, description and conditions to the current notification before charging tax.
- Smooth international trade: The first 6 digits are standardized internationally. India adds 2 digits for its tariff items; other countries may use different national extensions.
- Faster customs clearance: Customs authorities use HSN codes to quickly identify products, verify applicable import-export tariffs, and reduce inspection delays.
- Accurate GST filing and invoicing: Correct HSN details help you prepare invoices and report HSN-wise summaries in GST returns. You still need to check the applicable rate and meet the separate conditions for Input Tax Credit (ITC).
- Avoiding penalties: Missing required codes or misclassifying goods can lead to corrections, tax demands and penalties. A code error does not automatically cancel the buyer’s ITC.
What Is the Structure of an HSN Code?
Structure of an HSN code
10.06.30.20Basmati rice10 = cereals
1006 = rice
1006.30 = milled rice
1006.30.20 = Basmati
Each pair narrows the product from a broad category to a specific tariff item, following the 8-digit hierarchical format. GST invoices need 4 or 6 digits (by turnover and invoice type); customs uses the full 8 digits.
An HSN code in India follows an 8-digit hierarchical numerical format. Each additional pair of digits narrows the classification of a product from a broad category to the most specific tariff item, moving from chapter (digits 1–2) to heading (digits 3–4), sub-heading (digits 5–6), and tariff item (digits 7–8).
- Digits 1–2 (Chapter): The broad product category. Chapter 10, for example, covers cereals.
- Digits 3–4 (Heading): The heading within that chapter. For example, 1006 is rice.
- Digits 5–6 (Sub-heading): The international sub-heading. For example, 1006.30 covers semi-milled or wholly milled rice.
- Digits 7–8 (Tariff Item): The India-specific sub-classification. For example, 1006.30.20 identifies Basmati rice specifically.
GST tax invoices generally require 4 or 6 digits, depending on turnover and invoice type. Customs declarations for goods use India’s full 8-digit tariff item.
What Is the Applicability of HSN Code Under GST?
GST tax invoice requirements depend on aggregate turnover in the preceding financial year. Up to ₹5 crore, use at least 4 digits on Business-to-Business (B2B) invoices to registered customers; codes may be omitted on Business-to-Consumer (B2C) invoices to unregistered customers. Above ₹5 crore, use at least 6 digits on both. Imports and exports of goods use 8-digit Indian Trade Classification (Harmonised System), or ITC(HS), codes on customs declarations. This does not mean service-export invoices need an 8-digit goods code.
These invoice rules have applied since 1 April 2021. The old ₹1.5 crore exemption no longer applies. GST return reporting is separate: Table 12 of GSTR-1/1A has B2B and B2C tabs and a code-selection dropdown under the changes introduced from May 2025.
| Aggregate Turnover in Preceding Financial Year | Minimum HSN Digits Required | Invoice Type |
|---|---|---|
| Up to ₹5 crore | 4 digits | B2B tax invoices |
| Up to ₹5 crore | May be omitted | B2C tax invoices |
| Above ₹5 crore | 6 digits | B2B and B2C invoices |
| Any turnover (goods import/export) | 8 digits | Customs declarations for goods |
HSN Codes vs SAC Codes: Key Differences
HSN classifies goods, while SAC classifies services under GST. Goods codes can be reported at 4, 6 or 8 digits, depending on the requirement. Full SAC codes have 6 digits and begin with 99, although the service schedule also groups them under shorter headings. The WCO maintains the international HS; India publishes its goods tariff and service classification schedules.
| Feature | HSN Code | SAC Code |
|---|---|---|
| Full Form | Harmonized System of Nomenclature | Services Accounting Code |
| Length | Typically 4, 6, or 8 digits | 6 digits for full service codes |
| Purpose | Classifies physical goods | Classifies services |
| Starting Prefix | Varies by product chapter (e.g., rice starts with 1006) | Always starts with 99 |
| Classification Framework | WCO HS, with Indian tariff extensions | India’s GST scheme of classification of services |
| Example | Rice: 1006 | Restaurant services: 996331 |
For GST invoices, the 4- or 6-digit requirement depends on turnover and customer type. India’s 8-digit goods tariff codes are used for customs; they are not required for service exports.
What Are the Most Common HSN and SAC Codes for Indian Exporters?
These examples cover goods and services that Indian exporters and freelancers may supply. They are starting points, not a final classification. Confirm the exact product or service and the current rate before invoicing. The rates below are domestic GST rates; qualifying exports are zero-rated under GST.
Goods: HSN Codes by Sector
- Textiles, Apparel & Footwear: Knitted T-Shirts (6109), Men’s or Boys’ Non-Knitted Trousers & Breeches (6203), Footwear with Leather Uppers (6403).
- Agriculture & Food Products: Rice - Basmati & Non-Basmati (1006; Basmati rice specifically is 10063020), Cereals generally (Chapter 10).
- Electronics, Appliances & Machinery: Air Conditioners (8415), Computers and Laptops (8471), Primary Cells and Batteries (8506), Electric Accumulators (8507), Electrical Equipment & Telecom Components (Chapter 85), Vehicles, Motorcycles & Parts (Chapter 87).
- Chemicals, Construction & Materials: Paints & Varnishes (3208, 3209 or 3210), Pharmaceutical Products (Chapter 30), Plastics & Plastic Articles (Chapter 39), Cement (2523), Mineral Fuels and Oils (Chapter 27), Precious Metals & Jewellery (Chapter 71).
Services: SAC Codes by Sector
Full SAC codes begin with 99. Classify the service you actually supply: there is no single SAC for every freelancer or online content creator.
- Information Technology & Consulting: IT Consulting and Support (998313), IT Design and Development (998314), Commercial Training and Coaching (999293), Accounting and Bookkeeping (998222).
- Hospitality, Travel & Food: Hotel Accommodation (996311), Tour Operator Services (998555).
- Transportation & Logistics: Road Transport of Goods (996511), Courier Services (996812), Local Delivery Services (996813).
- Education & Training: Commercial Training and Coaching (999293), Other Education and Training Services Not Elsewhere Classified (999294). An education exemption depends on the provider and course meeting the notified conditions, not on the SAC alone.
Top HSN Codes for Goods
| HSN Code | Description | Domestic GST Rate |
|---|---|---|
| 8471 | Computers, laptops and tablets classified under 8471 | 18% |
| 8517 | Mobile phones and smartphones | 18% |
| 6201 | Men’s or boys’ non-knitted overcoats and similar articles | 5% up to ₹2,500/piece; 18% above |
| 3004 | Medicaments under 3004, subject to specific exemptions | 5%, unless specifically exempt |
| 0401 | Fresh or pasteurized milk, not concentrated or sweetened | 0% (exempt) |
| 1006 | Rice (Basmati & Non-Basmati) | 5% if pre-packaged and labelled; otherwise exempt |
| 6109 | Knitted T-shirts, including cotton | 5% up to ₹2,500/piece; 18% above |
| 6403 | Footwear with leather uppers | 5% up to ₹2,500/pair; 18% above |
| 8415 | Air Conditioners | 18% |
| 2523 | Cement | 18% |
Top SAC Codes for Services
| SAC Code | Description | Domestic GST Rate |
|---|---|---|
| 998314 | IT design and development services | 18% |
| 998313 | IT consulting and support services | 18% |
| 998222 | Accounting and bookkeeping services | 18% |
| 998391 | Specialty design services, including graphic design | 18% |
| 998361 | Advertising services | 18% |
| 996311 | Hotel accommodation services | 5% up to ₹7,500/unit/day; 18% above |
| 996511 | Road transport of goods | Exempt or taxable, depending on the transport service and conditions |
| 996812 | Courier services | 18% |
| 999293 | Commercial training and coaching services | 18%, unless specifically exempt |
| 999293 | Private coaching and test preparation services | 18%, unless specifically exempt |
What Are the Common Mistakes While Using HSN Codes?
The most common mistakes while using HSN codes are using the wrong number of digits, mixing up HSN and SAC codes, and copying codes from another business without verifying the actual product classification. Other mistakes are using outdated codes, ignoring Section and Chapter Notes, and overlooking Advance Rulings.
- Using fewer digits than required: Use at least 4 digits on B2B tax invoices if preceding-year turnover is up to ₹5 crore, and 6 digits on B2B and B2C tax invoices above ₹5 crore. Goods customs declarations use the full 8-digit tariff item. Do not apply that goods-customs rule to service invoices.
- Mixing up HSN and SAC codes: Use HSN for goods and SAC for services. An incorrect classification can lead to the wrong rate or reporting errors.
- Copying codes from competitors: Relying on another business's invoice instead of verifying your product's actual material composition, processing stage, and intended use is a common source of misclassification.
- Using outdated HSN codes: Codes are revised when the government updates tariff schedules and GST notifications. Not updating to current codes creates a mismatch.
- Ignoring Section and Chapter Notes: Read the legal notes and classification rules, not just the heading title. The material, processing stage and intended use can change the correct classification.
- Overlooking relevant rulings and clarifications: Check official guidance for your product. An advance ruling generally binds only its applicant and the concerned tax officers, so another business’s ruling is not automatically binding on you.
Consequences of Misclassification
- Wrong tax rate applied: Underpaid GST can lead to a tax demand and interest, generally at 18% a year for delayed tax payment. Overpaying can lock up working capital.
- ITC problems: Incorrect invoice or return details can create reconciliation issues for your buyer. ITC depends on the GST eligibility conditions; a wrong HSN code alone does not automatically deny credit.
- Penalties and notices: Misclassification can lead to tax demands, interest and penalties. The amount depends on the breach and tax involved; there is no single penalty cap for every case. Central and state GST penalties may both apply.
How to Find the Right HSN Code?
Start with the GST portal’s HSN search, then verify the result against the official goods tariff or service classification schedule. A search result helps you find a candidate code; it does not replace the classification rules.
- Search by product name: On the GST portal, open Services → User Services → Search HSN Code. Choose the description search and the goods or services tab. Enter at least 3 characters, select a matching description, complete the CAPTCHA and search. You can use the tool without logging in.
- Search by code: Enter at least the first 3 digits of a known code. Select a suggested entry, complete the CAPTCHA and search. Compare the related 4-, 6- and 8-digit goods codes and descriptions rather than assuming the first match is correct.
- Browse categories: For goods, check the official customs tariff’s sections, chapters, headings and legal notes. For services, use the GST scheme of classification of services. Then check the applicable rate notification separately.
Additional Verification Options
- Review the goods or services declared in your GST registration application or saved business records. These can be a starting point, but an earlier declaration is not proof that the classification is correct.
- For complex product mixes or unusual services, a chartered accountant familiar with GST can confirm the correct classification.
How Does Skydo Help Indian Exporters Receive International Payments?
The right SAC or HSN code is one part of export compliance. You also need to receive and document the payment. Skydo helps Indian businesses and freelancers collect international payments and keep their payment records in one place.
- Free virtual accounts: Get virtual receiving accounts in USD, EUR, GBP, SGD, AUD and CAD. Digital onboarding typically takes 10–15 minutes, with accounts ready after verification. There are no setup or monthly fees.
- Pricing: Pay USD 19 up to USD 2,000, USD 29 for USD 2,001–10,000, or 0.3% above USD 10,000, plus GST on the fee. There are no monthly fees. Amazon Global Selling has separate pricing.
- FIRA: Skydo automatically provides a free Foreign Inward Remittance Advice (FIRA) for each payment after settlement, supporting your payment records and export documentation. It does not replace a GST invoice or confirm that every export condition is met.
- eBRC generation: Link your Directorate General of Foreign Trade (DGFT) account, bulk-upload shipping bills and match Inward Remittance Messages (IRMs) to generate Electronic Bank Realisation Certificates (eBRCs) through Skydo’s workflow.
- EDPMS assistance: Skydo helps your bank reconcile receipts in the Export Data Processing and Monitoring System (EDPMS). Generating an eBRC does not by itself close an EDPMS entry.
- Support and settlement: Reach our India-based support team through WhatsApp, calls or text. Settlement timing depends on the payment route and screening or compliance checks.
Is it mandatory to mention HSN or SAC codes on every GST invoice?
Not every invoice needs the same number of digits. With preceding-financial-year aggregate turnover up to ₹5 crore, use at least 4 digits on B2B tax invoices; codes may be omitted on B2C tax invoices. Above ₹5 crore, use at least 6 digits on both. Services use SAC codes. The 8-digit requirement applies to goods customs declarations, not every export invoice.
What happens if I use the wrong HSN code on a GST invoice?
Do freelancers and IT service exporters need to use SAC codes or HSN codes?
How many digits of the HSN code are required based on my annual turnover?
Can I download a full HSN code list as a PDF?
Do HSN codes affect GST refunds or export benefits like LUT filing?
