13 March 2017
Dear Respected Members PLEASE TELL ABOUT HSN CODE OF GST. IS THIS IS LIKE ITEM CODE ???? IS THIS MANDATORY TO MENTION HSN ON ALL TYPES OF INVOICES IN GST
13 March 2017
Yes It is similar to excise Chapter Code. You have to mentioned 8 Digits CH Code in case your Turnover is below 5 Cr. & Incase Turnover is above 5 crore 4 Digits HSN/CH Code has to be mentione on invoices.
26 July 2024
### **HSN Code in GST: Overview and Requirements**
**1. **What is HSN Code?**
- **HSN Code**: Harmonized System of Nomenclature (HSN) code is an internationally standardized system of names and numbers for classifying traded products. It is used to ensure uniformity in the classification of goods and services globally.
- **Structure**: HSN codes are structured in a hierarchical manner: - **2-digit**: Represents broad categories of goods. - **4-digit**: Represents more detailed categories within the 2-digit codes. - **6-digit**: Provides an even more precise classification. - **8-digit**: In some countries, including India, the HSN code is extended to 8 digits for further granularity.
**2. **HSN Code vs. Item Code**
- **HSN Code**: Specifically used for GST and international trade classification. It categorizes goods for tax and customs purposes. - **Item Code**: Used by businesses for internal cataloging and inventory management. Item codes may not necessarily align with HSN codes.
**3. **Is it Mandatory to Mention HSN Code on Invoices?**
#### **A. **General Requirement**
- **For Goods**: The requirement to mention HSN codes on invoices is mandatory, with varying levels of detail depending on the turnover of the business and the type of transaction.
- **For Services**: While HSN codes are not applicable, the relevant SAC (Service Accounting Code) should be used.
#### **B. **HSN Code Requirements Based on Turnover**
- **Turnover Less than ₹5 Crore**: - **For Goods**: Businesses must mention the HSN code at a 4-digit level on invoices. - **For Services**: SAC codes should be mentioned if applicable.
- **Turnover ₹5 Crore or More**: - **For Goods**: Businesses are required to mention the HSN code at an 8-digit level on invoices. - **For Services**: Continue to use SAC codes where applicable.
#### **C. **Special Cases**
- **Export of Goods/Services**: HSN codes must be mentioned on invoices for export transactions to ensure compliance with international trade norms.
### **4. **How to Find the Correct HSN Code?**
1. **Refer to the GST Rate Schedule**: The GST rate schedule provides a comprehensive list of HSN codes and their corresponding rates. 2. **Consult the GST Portal**: The GST portal offers resources and tools to search for the correct HSN code. 3. **Seek Professional Guidance**: Consult with a tax professional or GST consultant if unsure about the correct HSN code for specific goods.
### **5. **Examples**
- **Example 1: Sale of Electronics** - **HSN Code**: For a sale of a mobile phone, the HSN code might be 8517 (based on the product’s classification). - **Invoice**: The invoice should mention “HSN Code: 8517” alongside the description and price.
- **Example 2: Sale of Furniture** - **HSN Code**: For wooden furniture, the HSN code could be 9403. - **Invoice**: The invoice should include “HSN Code: 9403” to ensure proper classification for GST purposes.
### **6. **Importance of Mentioning HSN Codes**
- **Compliance**: Ensures adherence to GST regulations and correct tax calculation. - **Audit Trail**: Provides a clear record for auditing purposes. - **Avoiding Penalties**: Helps in avoiding penalties and fines for incorrect or missing HSN codes.
### **Summary**
- **HSN Code**: A classification system used for GST and international trade. - **Mandatory Requirement**: Yes, HSN codes must be mentioned on invoices for goods; the level of detail depends on the business turnover. - **Finding HSN Codes**: Refer to GST schedules, the GST portal, or consult a tax professional for accurate classification.
By adhering to these requirements, businesses can ensure proper GST compliance and smooth operational processes.
CAclubindia
