HSN Codes Under Goods And Services Tax In India - Complete List

What is GST

Goods and Services Tax (GST) is the value-added tax levied on almost all goods sold for domestic consumption and services we use within the country. It is a single tax structure removing all the previous central and state taxes. GST is actually paid by the customers who avail the service or the goods they buy, but it is remitted to the government by businesses houses and companies.

GST is the final outcome after merging all the central taxes ( Excise duty, sales tax, service tax, surcharges and cesses) and state taxes (State VAT/ sales tax, Purchase tax, Luxury tax, entertainment tax, sin tax, etc.) and made into a single tax under the slogan “ One Nation, One Tax”.

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What are GST Rates

GST is one of the biggest reforms in the taxation sector in India. GST helped in bringing uniformity in the taxation of various commodities and services used in India. It also contributed in eliminating the cascading effect of various taxes levied by state and central government.

Goods and Services Tax (GST) is the single taxation, but due to the vast number of commodities and services, they are placed under different GST slabs or different GST tax rates.

The GST rates are fixed under 5 slabs,

• NIL : Under this tax slab 0% tax is levied on the goods or services we use.
• 5 % : Under this tax slab 5% tax is levied on the goods and services we use.
• 12%: Under this tax slab 12% tax is levied on the goods and services we use.
• 18%: Under this tax slab 18% tax is levied on the goods and services we use
• 28%: Under this tax slab 28% tax is levied on the goods and services we use.

NOTE: Gold and other precious metals are exempted and placed under 3% slab.

Till date 34 GST council meetings were held, many goods have been shifted to one slab to another. Some of the tax rates are decreased from 28% to 18% and some of the goods tax rates are shifted to 5% from NIL.

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What is an HSN code

HSN stands for “Harmonized system of Nomenclature” which was developed by the World Customs Organisation (WCO). WCO’s main objective for introducing HSN codes is to classify all the goods in a systematic manner. It clears the confusion and helps in domestic and international trade between the countries. More than 20,000 goods are traded using HSN codes across the world between the countries. More than 90% of world trade is done WCO using the revised HSN codes. India also included in the community by accepting the HSN codes procedure.

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Importance of GST HSN Code

For years other countries are using HSN codes for the trade. After the introduction of GST in our country, HSN and imports and exports standardize Codes as accepted in the global platform have been adopted.

The use of HSN codes minimize the cost and simplify the customs procedure.

The HSN codes help all the taxpayers, to know about GST rates against a particular product. It is mandatory to mention the HSN codes while filling the GSTR forms.

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How does HSN code work?

The use of HSN codes are mainly for dealers and trades. They must adopt 2 digits, 4 digits, and 8 digits HSN codes depending upon the following criteria.

• If the business turnover is less than Rs.1.5 crores then there is no need of adopting the HSN codes.
• If the business turnover is between Rs.1.5 Crs to Rs. 5 Crs then, they must adopt 2 digit HSN codes for the business trades.
• If the business turnover is above Rs.5 Crs then, they must adopt 4 digit HSN codes for the business.
• In the case of Import and export dealings and international trades, one must adopt 8 digit HSN codes for the business trades.

Under the HSN module the classification of the goods into different

• 21 Sections
• 99 chapters
• 1244 headings
• 5244 subheadings

Example of HSN Code

Covers almost all the goods which are in the trade.

Nylon Moulding Powder (HSN Code: 39 08 90 10)

• The first two digits (39) indicates the chapter under HSN codes.
• The next two digits (08) indicates the headings under chapters.
• Next 2 digits (90) indicates the sub-headings, 6 digits HSN code is accepted worldwide.
• The next 2 digits (10) sub-classify the product tariff heading during import and export of supply.

The use of HSN codes allows you to save time and money during GST filing, by filling the HSN codes it allows automation in GSTR.

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Chapter wise distribution of commodities using HSN code List

All the goods and services are classified into 21 sections and 99 chapters. The chapters are again into 1244 subheadings. The given HSN codes give the GST tax rates which are levied on the goods.

Sources:

http://www.cbic.gov.in/htdocs-cbec/customs/cst1718-010718/cst1718-0107-idx

http://www.cbic.gov.in/htdocs-cbec/customs/cst1718-020218/cst1718-0202-idx

http://www.cbic.gov.in/resources//htdocs-cbec/customs/cst1718-010718/Chapter%2050.pdf;jsessionid=0B42EB681A4CF892E4A7A033F712DEB9

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Challenges

Till now 34 GST council meetings are held with various agenda. To spread awareness about GST and use the HSN codes in trading, the government is facing difficulties for the past two years. Many goods are shifting from one tax slab to another tax slabs depending on the trade and usage. One HSN code is used for different tax slabs.

Many companies are yet to adopt the GST system. It created a big dilemma for the businessman whether to follow the old method or new HSN code system. Due to unawareness of the citizens and traders in rural areas, difficulties are being faced in following the present system.

It is important to produce the HSN codes of all the outward supplies along with other details while filing your GST return. Failing to mention the correct HSN codes in GSTR might lead to heavy penalties. Therefore, you should always check the correct HSN code before filing your returns. If you are still confused or need assistance with finding the correct HSN codes or filing your GST returns, our tax experts are the best solution for you.

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