5 Jul 2017, 15:08 — 4 min read
The HSN Code has been adopted in over 200 countries and is an internationally standardised nomenclature for classifying products that are to be traded. Here are some answers to some frequently asked questions about HSN Code under GST.
Q 1. What is the HSN Code?
As per Wikipedia – “The Harmonised Commodity Description and Coding System, also known as the Harmonised System (HS) of tariff nomenclature is an internationally standardised system of names and numbers to classify traded products.”
Q 2. Where is HSN Code required under the GST?
The Indian Government has adopted the HSN Code which is an internationally recognised system to identify and classify the products for Goods and Services Tax (GST). The HSN Code will be required at the following levels:
Taxpayers whose turnover is above INR 1.5 crores but below INR. 5 crores shall use 2 digit code and the taxpayers whose turnover is INR 5 crores and above shall use 4 digit code. Taxpayers whose turnover is below INR 1.5 crores are not required to mention HSN Code in their invoices. Services will be classified as per the Services Accounting Code (SAC). Turnover during the first year will be taken on self declaration basis and in the subsequent year the turnover of the preceding year will be used.
Q 3. Which dealers are not under mandatory requirement for use of HSN Code in invoices?
Following dealers are exempted from use of HSN Code in the Invoices:
Q 4. What is the benefit of use of HSN Code under GST?
The benefits of use of HSN Code are as below:
Q 5. Where can we find the HSN Code of a commodity?
A commodity wise list of HSN Code has been provided on the GST Portal.
It is very essential for a dealer to carefully select the HSN Code of his commodity at the time of migration and/ or fresh registration under GST. This will directly effect the applicable tax rate on his product. Further it is suggested to bring more awareness amongst the tax professionals as well as the dealers to understand the correct (accurate) use of the HSN Code under the GST.
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