HSN Code Finder

What is an HSN Code?

HSN Code stands for Harmonized System of Nomenclature Code, a standardized international classification method for systematically grouping products worldwide. The World Customs Organization created the HSN Code, which is now implemented by more than 200 nations to enhance international trade operations.

Why is the HSN code Important?

Taxation on trading and logistics operations heavily depends on the HSN code for the following reasons:

1. Standardization of Goods

• Every product is classified through the universal HSN system of codes. This helps avoid confusion over product names.
• All countries should maintain uniformity when dealing with naming systems and coding.

2. Smooth International Trade

• Customs officials need HSN codes to identify imported or exported products.
• Border clearance processes become faster when HSN codes are used because they help prevent misunderstandings and disputes.
• The correct duty rates and taxation requirements become easy to determine through HSN classification.

3. Taxation (especially in India under GST): HSN Codes, at present, form a key part of the Indian GST framework by accomplishing the following functions:

• Businesses use the correct tax rates for their product offerings.
• File GST returns correctly.
• Official requirements dictate that medium and large businesses include HSN codes in their invoice and return documentation.

4. Economic & Trade Data Analysis: Multiple government agencies, together with international organizations, use HSN data for calculating trade statistics, conducting market research, and implementing policy decisions.

5. Accuracy in Invoicing: Helps avoid the misclassification of goods. Also, proper pricing, together with tax requirements, must be established at the time of billing.

6. Real-Life Benefit: A business that exports plastic kitchenware to foreign markets will get multiple benefits from correctly choosing an HSN code, such as correct tax benefits, faster customs processing and better credibility with international buyers

Who Provides the HSN Code?

HSN codes are assigned by different authorities at the international and domestic stage. Let us look at them in detail.

1. International Level

• The World Customs Organization operates as the global authority, maintaining all HSN codes by developing and managing the Harmonized System (HS).
• All nations use the 6-digit system developed by the WCO.
• The classification gets updated every five years to include modern products and the latest technologies.

2. In India

Under the Ministry of Finance, the Central Board of Indirect Taxes and Customs (CBIC) maintains complete responsibility for HSN code administration in India and is responsible for: 

• Adopting the international HS codes.
• The classification system allows a maximum of eight additional digits to create more detailed groupings.
• The organization maintains a process for publishing and updating HSN codes, which serve GST, customs, and trade purposes.

The HSN codes of India are available through two sources.

• GST rates are publicly available on the website gst.gov.in.
• CBIC’s tariff and customs classification documents

HSN Global Adoption

Let’s look at the global impact of the HSN system:

1. The HSN system is used in over 200 countries worldwide. This strong adoption rate shows how well it works to boost global trade activities.
2. It is estimated that more than 98% of the merchandise traded nationally uses the HSN code for classification.
3. For most products, the 6-digit HSN code stays the same in all the countries that are involved. Having this kind of consistency helps cut down on confusion and makes it easier to handle international trade.
4. The HSN is a key for various countries when it comes to figuring out their customs tariffs. It helps them fix and collect import duties and taxes in a fair manner.
5. While the first 6 digits of the HSN code are the same around the world, countries can tweak it and add more digits if they want to. For example, India has added two digits to the HSN code to classify goods for tariffs and statistical purposes.
6. The HSN helps to simplify customs and trade procedures; it makes things like customs clearance invoicing smoother. This ultimately cuts down on costs for international trade, which can be a big win for everyone involved.

How does the HSN code Work?

HSN codes can be interpreted in the following ways:

1. Digits Breakdown: The HSN Code usually has 6 digits, which is the standard used around the world. But in some countries, they might add a couple more digits, like 8 or 10, to get into more specific categories. A HSN code can be broken down in the following ways:

• First 2 Digits - The first 2 digits show the chapter, which is a broad category, like a main topic or theme. For example, 09 for coffee, tea, spices, etc.
• Next 2 Digits - The next two digits are used to show the heading, eg, 0901 for coffee. 
• Last 2 Digits - These digits provide a subheading, providing further detail; eg, 090111 for coffee, not roasted, not decaffeinated 
• Additional Digits (if any) - Countries like India use 8-digit codes for a more detailed tax classifications. eg, GST.

2. Chapters: There are 99 chapters in total, grouped by the type of goods ( eg, machinery, chemicals). 

3. Sections: These chapters are organized into 21 comprehensive sections, allowing for easier navigation. 

How is it Used?

HSX codes are used for the following purposes:

1. Customs & Tariffs: When goods move across borders, customs officials look at HSN codes to find out what duties and taxes are applicable. 
2. Taxation: In India, HSN Codes are a part of GST (Goods & Services Tax), which is used to classify products and determine taxes
3. Trade Statistics: Governments and organisations keep an eye on imports and exports with the help of these codes.
4. Uniformity: Uniformity ensures that everyone involved - exporters, importers, and regulators- uses the same code for a product. This way, there is less chance of mix-ups and misunderstandings. 

Example of HSN Code

Example 1 - WHEAT FLOUR 

HSN Code (1101 00)

Example 2 - TOOTHPASTE

HSN Code (3306 10)

Example 3 - SMARTPHONE

HSN Code (8517 12)

HSN Code in India

In India, HSN Codes are crucial for smooth functioning of the economy in the following ways:

1. In India, the Harmonized System of Nomenclature code is an 8-digit code used to classify goods for the goods and services tags (GST).
2. The standard HSN code that you generally come across in the world has 6 digits, but India decided to add 2 extra digits. This gives it the ITC HS code, which stands for Indian Trade Clarification based on the Harmonized System of Coding, which helps for a more precise domestic classification. 
3. It is mandatory to include HSN Codes on tax invoices issued under GST, as well as in GSTR-1 returns. 
4. The number of digits of the HSN Code you need to mention depends on the business turnover in the last financial year.
   • Turnover up to 1.5 Cr - No need to mention HSN Code 
   • Turnover more than 1.5 Crores and up to 5 crores - Need to mention two digit HSN Code. 
   • Turnover exceeding 5 crore - Need to mention a 4-digit HSN Code.
   • For imports & exports, an 8-digit HSN Code is necessary to match international standards. 

To sum it up, the HSN Code in India is important for the GST System. It helps to organise and categorize goods in a simple and consistent way for taxes, trading, and statistics.

Chapter-wise HSN Code List

Here is the Chapter-wise distribution of goods using HSN codes.

Services Accounting Code (SAC) in GST

The Services Accounting Code, or SAC, is a 6-digit code used in India to help categorize services under the goods and services tax (GST). It's all about making things easier to manage when it comes to service taxes.

So, just like we have HSN codes to classify goods, we use SAC codes for services. This helps to accurately identify services and make sure the right amount of GST is charged.

Here is a breakdown of how SAC works

• The first two digits are 99, common for all services and shows what ‘chapter’ these services fall under in GST. 
• The next two numbers show the category of service under consideration (the heading).
• The last two digits represent the specific nature of the service (the service code).

For example, the SAC code 995411 represents general construction services of buildings. 

Here, 99 is for services, 54 shows the heading i.e., construction services, and 11 specifies the subheading i.e., general construction of buildings. 

Importance of SAC

SAC is important identifier in the GST framework as it plays a crucial role in the following processes:

1. Service Identification: SAC Codes are like tags that help us identify different services; they make it easy to sort and group the various service offerings. 
2. GST Rate Determination: These codes are connected to particular GST rates for various services. If you are a taxpayer you can find the right GST rate for your services by looking at the SAC code. In India GST rates for services are categorized into different slabs: 0%, 5%, 12%, 18%, and 28%.
3. GST Registration: When registering for GST, service providers are required to specify the appropriate SEC codes corresponding to the services they offer.
4. Invoicing: When it comes to invoicing, taxpayers need to include the right SAC code on the invoices they send for any services they provide. This makes things clear and helps clients get a grip on how GST affects them.
5. Government Analysis: By using different SAC codes, the government can keep track of GST collections for various service categories, which will help them manage taxes and revenue more effectively

What is UQC, and what is its Connection with GST?

In the context of GST, UQC is a standardized code that tells how goods are measured on tax invoices and in GST returns. It helps keep everything consistent and organized. It is a standard way to specify quantities like kilograms, liters, meters, or pieces, etc.

Below is mentioned how UQC and GST are related;

1. Standardization: The main objective of UQC under GST is to make sure that every taxpayer uses the same terms for units of measurement.

Before the implementation of UQC companies often used various abbreviations or complete terms for identical units ( eg, kgs, kilos, kilograms). This inconsistency made it tough for the GST network and tax officials to keep track of and interpret the data properly. 

2. Mandatory Reporting: According to the CGST (Central Goods and Services Tax) rules, any tax invoice, credit note, or debit note needs to show the UQC along with how many of the goods were supplied.

3. GST Returns: When taxpayers are filling out their GSTR 1 i.e., how much sales they have made, they need to mention the UQC.

4. E-invoicing and E-way Bills: UQC plays an important role in E-invoices and E-way bills. It helps keep things consistent when reporting on various GST related documents. 

5. Avoiding Errors: The GST portal and its related systems usually only take certain types of UQC Codes. Using unusual shortcuts or descriptions might mess things up when the taxpayer files the returns. So, it is necessary for the businesses to stick to the UQC Codes that GSTN has laid out.

6. Clarity in Transactions: UQCs help buyers and sellers clearly understand the quantity involved in transactions.

Some of the commonly used UQC Codes are as follows 

How To Find A Product's HSN Code Using HSN Code Finder?

If you need to find a product using an HSN code finder, just follow these simple steps which are usually the same for most of the online tools.

Step 1 - Visit Pocketful Website

Search for Pocketful HSN Code finder.

Step 2 - Choose a Search Method

Most HSN code finders let you search in a bunch of different ways,

• Search by Product Name (Keyword Search)
  a) This is the most common method one needs to type a descriptive keyword or the name of the product in the search bar.
  b) The tool will help you find the right 4-digit HSN codes based on what you enter. If you do not spot the exact match you are looking for, click this search button for more options
  c) When you come across a 4 digit code that seems right, just click on it, and it usually opens up to reveal the complete 6 or eight digit HSN code along with the applicable GST rates. 
• Search by HSN Code 
  If you have at least the first 2 or 4 digits of the HSN code, you can input it into the search bar for quick results. The system will retrieve detailed information about the partial code including GST rates and product categories.
• Browse by Category List 
  Some tools give you a handy list of HSN codes, usually split into the 21 main sections of the HSN system. You can easily go through this list by starting at the 2-digit level which is like the chapter, and then get into more detailed levels, all the way down to the 8 digit level for India. This way you can find the exact HSN code that aligns with your product.
  
  

Step 3 - Analyze the results 

• Once you perform a search, the tool will show you possible HSN codes along with a description of what product category they belong to and the GST rates.
• Take your time to go through the descriptions and make sure you pick the code that best fits what your product is all about, including composition, nature, and how it is used

Key Features of the GST HSN Finder Tool

A GST HSN finder tool helps businesses quickly and accurately find the HSN codes for their products and ensures that they are using the right codes for their goods without any hassle. 

Some of the key features of the GST HSN Finder tool are as follows;

1. Multiple Search Options: As mentioned earlier, the HSN finder tool lets people find the respective HSN code by using multiple search options. They can search by the product name, by HSN code or by browsing the category list

2. Comprehensive Information Display

• HSN codes of 4, 6, and 8 digits show various levels of detail with the option to see more or less specific information depending on the number of digits. Also, gives you a simple and clear rundown of what each HSN code is all about.
• It displays the GST rates CGST, SGST, and IGST for the specified HSN code. 

3. User-friendly Interface: It is easy to locate and use for keyword or code-based searches. It is simple to scroll through categories and find the specific product codes that the user is looking for. 

Additionally, various tools can be accessed on different devices, so you can look them up anytime, anywhere. Furthermore, some portals offer the option to download the complete HSN code list in Excel format. 

To sum it up, a good GST HSN finder tool makes it easier for businesses to find out how to classify their goods under GST, and help them stay on the right side of the rules, work out their tax responsibilities correctly, and keep their invoicing and tax return processes smooth and hassle free.

Never underestimate the significance of these numbers; they are essential to achieving success in your GST journey!