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”.
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,
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.
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.
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.
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.
Under the HSN module the classification of the goods into different
Covers almost all the goods which are in the trade.
Nylon Moulding Powder (HSN Code: 39 08 90 10)
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.
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.
|Serial No / Chapter No’s||Description|
|Chapter 1||Live Animals and poultry|
|Chapter 2||Animal Meat and edible offals|
|Chapter 3||Fish, fillets and other aquatic animals meat|
|Chapter 4||Honey, Eggs and Dairy Products|
|Chapter 5||Inedible animal products (unspecified)|
|Chapter 6||Flowers, Live trees and plants|
|Chapter 9||Tea, coffee, spices|
|Chapter 10||Cereals and Grains|
|Chapter 11||Milling Industry Products|
|Chapter 12||Medicinal Plants, seeds and fruits|
|Chapter 13||Lac, Gums, Resins, vegetable SAP and other extracts|
|Chapter 14||Vegetable products and materials (unspecified)|
|Chapter 15||Oils, Fats, Vegetable and Animal products|
|Chapter 16||Fish and aquatic vertebrates meat (Prepared/Preserved)|
|Chapter 17||Sugar, sugar confectionery and bubble gums|
|Chapter 18||Cocoa and Cocoa products|
|Chapter 19||Pastry, pizza, bread, waffles|
|Chapter 20||Fruits, Juices, Jams and Jellies|
|Chapter 21||Tea, coffee and other edible preparations|
|Chapter 22||Non-alcoholic beverages, Spirit and Vinegar|
|Chapter 23||Residual starch products, meals, and pellets|
|Chapter 24||Tobacco and tobacco products|
|Chapter 25||Salts and Marbles|
|Chapter 26||Mineral ores and concentrates|
|Chapter 27||Coal, Petroleum and other fossil fuels|
|Chapter 28||Gases and Inorganic Chemicals|
|Chapter 30||Blood and Pharma products|
|Chapter 31||Fertilizers and unspecified products|
|Chapter 32||Colouring and Tanning products|
|Chapter 33||Cosmetics and oils|
|Chapter 34||Soaps and waxes|
|Chapter 35||Glues and Enzymes|
|Chapter 36||Industrial explosives and fireworks|
|Chapter 37||Photographic and cinematographic goods|
|Chapter 38||Chemicals and clinical wastes|
|Chapter 39||Plastic products|
|Chapter 40||Rubber and rubber products|
|Chapter 41||Skins and rawhides|
|Chapter 42||Leather products: Bags, wallets, and handbags|
|Chapter 43||Raw and artificial fur products|
|Chapter 44||Wood products and Wood charcoal|
|Chapter 45||Natural and Shuttlecock Cork|
|Chapter 46||Basketware, of esparto or of other plaiting materials; wickerwork and manufacturers of Straw|
|Chapter 47||Wood Pulp|
|Chapter 48||Paper, Paperboard, Newsprint|
|Chapter 49||Printed Books, Newspapers and Postal goods|
|Chapter 51||Fine, woolor coarse animal hair; woven fabric andhorse hair yarn|
|Chapter 53||paper yarn and woven fabrics of paper yarn and Other vegetable textile fibres|
|Chapter 54||Man-made filaments|
|Chapter 55||Man-made staple fibres|
|Chapter 56||Cables,ropes, felt and nonwovens,cordage, wadding; special yarns; twine and articles thereof|
|Chapter 57||Carpets and other textile floor coverings|
|Chapter 58||Fabrics of tufted textile, lace; tapestries,trimmings; embroidery|
|Chapter 59||Coated and laminated textile fabrics, special woven fabrics,|
|Chapter 60||Knitted or crocheted fabrics|
|Chapter 61||Accessories of clothing knitted or crocheted and articles of apparel|
|Chapter 62||Clothing accessories not knitted or crochetedand articles of apparel|
|Chapter 63||Other textile articles, sets, worn clothing and rags,worn textile articles|
|Chapter 64||Footwear, gaiters, and parts of such articles|
|Chapter 65||Headgear parts thereof|
|Chapter 66||Umbrellas, walking stick and accessories|
|Chapter 67||Wigs, artificial flowers, false beards|
|Chapter 68||Cement, Plaster, mica and construction materials|
|Chapter 69||Bricks and ceramic products|
|Chapter 70||Glass and glassware products|
|Chapter 71||Gold, silver, diamond, pearls and other precious metals|
|Chapter 72||Iron, steel, Iron rods and non-alloy products|
|Chapter 73||Railway tracks, iron tube, Containers, nails, needles and sanitary wares|
|Chapter 74||Copper and copper alloy products|
|Chapter 75||Nickel and nickel alloy products|
|Chapter 76||Aluminium and aluminium products|
|Chapter 77||(Reserved for possible future use)|
|Chapter 78||Lead, lead foils and sheets|
|Chapter 79||Zinc bars,Zinc dust and sheets|
|Chapter 80||Tin, tin bars and profiles|
|Chapter 81||Cobalt, Magnesium, Bismuth and other base metals|
|Chapter 82||Agricultural tools, cutlery, razors and knives|
|Chapter 83||Padlocks, bells, safe deposit lockers and base metal products|
|Chapter 84||Industrial tools and machinery|
|Chapter 85||Electrical and electronic products|
|Chapter 86||Railway machinery and locomotives|
|Chapter 87||Motor vehicles|
|Chapter 88||Aircrafts, satellites, parachutes|
|Chapter 89||Boats, ships, cargo vessels|
|Chapter 90||Artificial organs, Medical equipment, monitoring systems, photographic, cinematographic accessories, lens and opticals fibres|
|Chapter 91||Watches and clocks|
|Chapter 92||All Musical Instruments|
|Chapter 93||Arms and Military weapons|
|Chapter 94||Lighting, furniture and household products|
|Chapter 95||Electronic toys, sports goods and gaming consoles|
|Chapter 96||Pens, pencils, educational equipments and smoking pipes|
|Chapter 97||Arts and Antiques|
|Chapter 98||Passenger baggage, laboratory chemical and project imports|
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.
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HSN (Harmonized System of Nomenclature) is developed by the World Customs Organisation. These codes are used to classify the goods and is accepted across the world. HSN codes help in filling the GST returns, import and export of goods.
HSN codes are used for the classification of goods by the taxpayers during filing GST returns. If the dealers or taxpayers turnover is more than 1.5 Crores, then he/she must mention the HSN code in the invoice otherwise it is not mandatory to disclose HSN on taxable invoice.
HSN (Harmonized System of Nomenclature) codes are used for the classification of goods and SAC (Services account codes) codes are used for services.
HSN (Harmonized System of Nomenclature) is developed by World’s Customs Organisation. HSN codes are used to classify the goods. HS codes are similar in all the countries which are under WCO. They use 6 digit HSN code for the goods, but some countries use 8 digit code to subclassify the product or goods.
HSN codes are unique for each product. Under HSN, all the goods and services are divided into 21 sections, 99 chapters. Under 99 chapters there are 1244 headings and 5244 subheadings. Each item which is used for trade or commercial use, it is identified with 8 digit code using the HSN code rules.
Taking an example of Cocoa powder to calculate the GST using HSN code.
Cocoa Powder( chocolate powder) per Kg= Rs.1,000.
HSN code = 18 05 00 00
GST rate = 18%
GST = Rs.180