HSN & SAC Codes in GST
In India’s Goods and Services Tax (GST) system, HSN and SAC codes are classification systems used to identify goods and services for taxation purposes.
1. HSN (Harmonized System of Nomenclature) Code
- Used for goods (physical products).
- A globally accepted classification system developed by the World Customs Organization (WCO).
- In India, businesses must mention HSN codes on invoices and GST returns.
- HSN Structure in India:
- 4-digit code → Mandatory for businesses with turnover above ₹1.5 crore.
- 6-digit code → Used for international trade.
- 8-digit code → Used for specific products as per India’s GST requirements.
🔹 Example:
- HSN 1006 → Rice
- HSN 8703 → Passenger cars
2. SAC (Service Accounting Code)
- Used for services (intangible offerings).
- Defined by India’s Central Board of Indirect Taxes & Customs (CBIC).
- Like HSN, SAC codes help in identifying the applicable GST rate for services.
🔹 Example:
- SAC 9963 → Accommodation services
- SAC 9983 → IT consulting services
Why Are HSN/SAC Codes Important?
✅ Ensure proper GST classification for tax calculations.
✅ Help businesses comply with GST regulations and avoid penalties.
✅ Enable seamless international trade using a standardized classification.