Part of: GS Prelims and GS – III- Economy
News: The ministry of finance has announced that businesses with turnover of Rs 5 crore and above will have to furnish six-digit HSN or tariff code on the invoices issued for supplies of taxable goods and services
- HSN stands for Harmonised System of Nomenclature code. It is mandatory for both B2B and B2C tax invoices on the supplies of Goods and Services.
- This was introduced in 1988 by the World Customs Organization (WCO).
- This was introduced for a systematic classification of goods both national and international.
- This is a 6-digit code that classifies various products.
- India has been using HSN codes since 1986 to classify commodities for Customs and Central Excise. HSN codes apply to Customs and GST.
- The codes prescribed in the Customs tariff are used for the GST purposes too. HSN is used all over the world.
- There are different HSN codes for various commodities. HSN codes remove the need to upload details about the goods which makes filing of GST returns easier.
- The HSN code contains 21 sections. These are divided into 99 chapters which are divided into 1244 sections. This system helps in making GST simpler and globally accepted. HSN codes for goods at 6 digits are universally common. Common HSN codes apply to Customs and GST. Codes prescribed in the Customs tariff are used for the GST purposes. In Customs Tariff, HS code is prescribed as heading (4 digits HS), sub-heading (6 digits HS) and tariff items (8 digits).
SAC HSN code
- SAC code stands for Services Accounting.
- This is issued by Central Board of Indirect Taxes and Customs (CBIC) to classify each service under GST.
- Each service has a unique SAC.
- These SAC codes can be used in invoices created by you for the services you delivered. HSN and SAC codes are used to classify goods and services under GST regime.