Processor HSN Code

Understanding the HSN Code for Processors

In the digital age, processors are the brains of our electronic devices, from smartphones to supercomputers. For businesses dealing with these critical components in India, understanding the Harmonized System of Nomenclature (HSN) code for processors is essential for accurate GST compliance.

The Processor’s HSN Code

Processors, at their core, are highly complex electronic integrated circuits. Therefore, they fall under Chapter 85 of the HSN, which covers “Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles.”

More specifically, the HSN code for processors is 85423100. This detailed HSN description reads: “Electronic Integrated Circuits – Electronic Integrated Circuits — Processors And Controllers, Whether Or Not Combined With Memories, Converters, Logic Circuits, Amplifiers, Clock And Timing Circuits, Or Other Circuits.”

This comprehensive description covers a wide range of processors and controllers, acknowledging that these vital components often integrate various other functionalities like memory, converters, and logic circuits onto a single chip.

GST Rate on Processors

The GST rate applicable to processors (HSN 85423100) is 18%. This rate has been effective since July 1, 2017. This standardized rate simplifies taxation for businesses involved in the import, manufacture, or sale of processors.

Why HSN Codes Matter for Processors

Accurate HSN classification for processors is crucial for several reasons:

• GST Compliance: It ensures that businesses charge and pay the correct amount of GST, avoiding penalties and legal issues.
• Trade Facilitation: As HSN is an internationally recognized system, it simplifies customs clearance and global trade for processors.
• Data Analysis: It aids in collecting and analyzing trade statistics, providing insights into the electronics market.
• Input Tax Credit (ITC): Businesses can properly claim ITC on the purchase of processors if they are used for business purposes, further streamlining their tax liabilities.