Friends, Now a days GST is in question for all. For maintaining accounts or raising invoices / bills HSN (Harmonised System of Nomenclature) codes are required for each and every item.
HSN is Harmonised System of Nomenclature. HSN number was already being used for assigning Excise Duty on Manufactured goods in India.
It is a multipurpose international product nomenclature developed by the World Customs Organization (WCO). The system is used by more than 200 countries and economies as a basis for their Customs tariffs and for the collection of international trade statistics. It is also extensively used by governments, international organizations and the private sector for many other purposes such as internal taxes, trade policies, monitoring of controlled goods, rules of origin etc.
HSN Requirements under Goods and Service Tax Law
Not all Suppliers need to mention HSN code on their invoices issued. (Update on 16 june 2017)
– Taxpayers whose turnover is above Rs. 1.5 crores but below Rs. 5 crores shall mention 2 digit code on Invoice.
– Taxpayers whose turnover is Rs. 5 crores and above shall mention 4 digit code on Invoice
– Taxpayers whose turnover is below Rs. 1.5 crores are not required to mention HSN Code in their invoices.
Turnover for the purpose is PY turnover. In case of new business, there is no circular/notification.
Services will be required to be classified per the Services Accounting Code (SAC)
Below is the list of standard HSN Sections, these are standard across all countries and economies.
Section I (Chapters 1 to 5) – live animals and animal products
Section II (Chapters 6 to 14) – vegetable products
Section III (Chapter 15) – animal or vegetable fats and oils
Section IV (Chapters 16 to 24) – beverages, spirits, vinegar, and tobacco
Section V (Chapters 25 to 27) – mineral products
Section VI (Chapters 28 to 38) – chemical and para-chemical products
Section VII (Chapters 39 to 40) – plastics and rubber, and articles thereof
Section VIII (Chapters 41 to 43) – certain animal hides and skins
Section IX (Chapters 44 to 46) -wood, cork, manufactures of straw, and articles thereof
Section X (Chapters 47 to 49) – pulp of wood, paper, paperboard, and printed products
Section XI (Chapters 50 to 63) – textiles and textile articles
Section XII (Chapters 64 to 67) – footwear, headgear, umbrellas, walking sticks, prepared feathers, artificial flowers, and articles of human hair
Section XIII (Chapters 68 to 70) – articles made of minerals, stone, plaster, cement, etc., and ceramic and glass products
Section XIV (Chapter 71) – precious metals and stones
Section XV (Chapters 72 to 83) – base metals and articles thereof (Note: Chapter 77 is reserved for future use)
Section XVI (Chapters 84 to 85) – machinery and mechanical appliances, electrical equipment, sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles
Section XVII (Chapters 86 to 89) – vehicles, aircraft, vessels, and associated transport equipment
Section XVIII (Chapters 90 to 92) – optical, photographic, cinematographic, and musical apparatus and equipment; measuring, medical, surgical, and other instruments; and clocks and watches
Section XIX (Chapter 93) – arms and ammunitions
Section XX (Chapters 94 to 96) – miscellaneous manufactured articles
Section XXI (Chapters 97 to 99) – arts, collector’s pieces, and antiques (Note: Chapter 99 is reserved for national use)