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On HSN Code

The HSN code is a 6-digit code that classifies over 5,000 products into a logical structure. It is widely used for taxation purposes to identify tax rates for specific products being imported or exported by a country. The HSN code structure contains 21 sections, 99 chapters, and over 5,000 subheadings. In India, an 8-digit HSN code is required for tax invoices and customs paperwork. HSN codes help governments evaluate trade and make policy decisions.

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ishika SHANDILYA
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131 views

On HSN Code

The HSN code is a 6-digit code that classifies over 5,000 products into a logical structure. It is widely used for taxation purposes to identify tax rates for specific products being imported or exported by a country. The HSN code structure contains 21 sections, 99 chapters, and over 5,000 subheadings. In India, an 8-digit HSN code is required for tax invoices and customs paperwork. HSN codes help governments evaluate trade and make policy decisions.

Uploaded by

ishika SHANDILYA
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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HSN CODE

WHAT IS AN HSN CODE?

HSN stands for 'Harmonized system


Nomenclature.'The WCO (World Customs
Organization) developed it as a
multipurpose international product
nomenclature that first came into effect in
1988 with the vision of facilitating the
classification of goods all over the World in
a systematic manner..
HOW DO HSN WORK?
HSN is a six-digit code that classifies more than 5000
products, arranged in a legal and logical structure.

HSN classification is widely used for taxation purposes


by helping to identify the rate of tax applicable to a
specific product in a country that is under review.

It also applies to import and exports. The HSN code


aids in determining the quantity of all items imported or
traded through a nation.

3
DIFFERENT SECTIONS UNDER THE HSN CODE SYSTEM
The HSN code structure contains:
21 Sections
99 Chapters
1244 Headings
5224 Subheadings

Example to help you better understand the HSN code structure –


HSN-62.13.90 refers to the handkerchiefs made of textile. Here,
62 – the first two digits of the code represent the chapter number that
covers articles of apparel and clothing
13 – the next two digits of the HSN code represent the heading number
that covers handkerchiefs.
90 – the last two digits of the code represent the product code for
handkerchiefs made of textile materials.
HOW HSN CODE ARE STRUCTURED?
11041300

110413 00
Specific to respective
Followed Globally
countries

Eg:- In India we have 8 digit HSN code

4
IMPORTANCE OF HSN CODE

Gathering data Systematic and


easy GST filing

Evaluate foreign and


domestic trade

Tax invoice

Help government
decide policies
5
THE MOST WIDELY USED HSN IN INIDA IS FOR :-
Filing GST return
Tax invoices
custom paperwork

NOTIFICATION ISSUED BY CBIC (CENTRAL


BOARD OF INDIRECT TAXES & CUSTOMS)

Aggregate turnover up to Rs 5 cr -4 digit number HSN


code in their GST return (for B2B)
Aggregate turnover more than Rs 5 cr - 6 digit for their
products
6
CLASSIFYING GOODS UNDER HSN

• Rule 1
- Titles of sections, chapters, and sub-chapters are provided for ease of
reference only.
- For legal purposes, refer to headings and sub-headings to drive
classification.

• Rule 2a
- If the goods are incomplete/unfinished and have the characteristics of the
finished product, classification is the same as that of the finished product (if
the classification is known).
- The heading shall also include removed/unassembled or disassembled
parts (i.e., SKD/CKD).
7
• Rule 2b
- Any reference to a material or substance includes a reference to mixtures or
combinations of that material or substance with other materials or substances.
- The classification of goods consisting of more than one material or substance shall
take place as per Rule 3.

• Rule 3a
- Choosing a specific heading is preferred over a general heading.
For example, 85.10 is the classification for "shavers, hair clippers and hair removing
appliances, with self-contained electric motor."
- This is a more specific classification for a handheld electric razor than either: 67:
*tools for working in the hand, pneumatic, hydraulic or with self-contained electric
or non-electric motor." or 09: "electro-mechanical domestic appliances with self-
contained electric motors, other than vacuum cleaners"

8
• Rule 3b
-Mixtures/composite goods should be classified per the material or substance that
gives them their essential character.
For example, a grooming kit consisting of electric hair clippers
(85.10), a comb (96.15), and a brush (96.03) inside a leather case (45.02), should be
classified under the electric hair clippers heading (85.10).

• Rule 30
- If two headings are equally suited to the item, choose the heading that appears
last in numerical order.

• Rule 4
- If goods cannot be classified per the above rules, they are to be classified
according to the goods to which they are most akin.

9
• Rule 5
- Containers specifically designed for the article and suitable for long-term
use will be classified along with that article, if such articles are normally
sold along with such cases.
o For example, a camera case would fall under cameras.
-Packing materials and containers are also to be classified with the related
goods except when the packing is for repetitive use.

10
FEW EXAMPLES OF HSN CODE :-
The HSN codes are organized in sections, which are divided into chapters, headings
and sub-headings.
1. Section 1:- for animal products
2. Section 2:- vegetable products
3. Section 6:- chemical products
4. Section 11:- textile and textiles article
5. Section 17:- vehicles parts or equipment
THANKS YOU

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