HSN Code (Harmonized System of Nomenclature)
HSN Code (Harmonized System of Nomenclature)
HSN Code stands for Harmonized System of Nomenclature — the internationally standardised numeric classification system developed by the World Customs Organization (WCO) in 1988 that assigns a unique code to every physical good traded globally. In India's GST system, HSN codes appear on Tax Invoices for goods, determine the applicable GST rate, and are reported in GSTR-1's HSN summary (Table 12). They are the universal language that tells the government — and customs authorities worldwide — exactly what product is being sold.
India uses an 8-digit HSN code for import and export purposes (extending the WCO's base 6-digit structure with two additional national digits for finer classification), and 4- or 6-digit HSN codes for domestic GST invoices depending on the supplier's annual turnover.
HSN codes are for goods only. If you sell services — software development, consulting, design, marketing — you use SAC codes (Services Accounting Codes), not HSN codes. The two systems are parallel: HSN classifies goods; SAC classifies services. A Tax Invoice for a mixed supply (goods + services) will carry both an HSN code for the goods component and a SAC code for the service component.
Quick reference
| Full form | Harmonized System of Nomenclature |
| Developed by | World Customs Organization (WCO), 1988 |
| Used for | Classifying physical goods only (not services) |
| Services equivalent | SAC code (Services Accounting Code) |
| Total structure | 21 Sections, 99 Chapters, ~1,244 Headings, 5,224+ Sub-headings |
| Digits in India: domestic GST | 4 digits (turnover ≤ ₹5 crore, B2B) or 6 digits (turnover > ₹5 crore, all invoices) |
| Digits in India: imports and exports | 8 digits, always mandatory |
| Penalty for wrong/missing HSN | ₹50 per invoice under Section 125, CGST Act (up to ₹25,000 per year) |
| Where it appears | Tax Invoice, GSTR-1 Table 12, e-invoice IRN, Bill of Entry (imports) |
| Official lookup tool | services.gst.gov.in/services/searchhsnsac (free, no login required) |
HSN code structure: decoding the 8 digits
Every HSN code follows a hierarchical structure — each additional pair of digits narrows the classification further.
Example: Mobile Phone (Smartphone) — HSN 85171219
| Position | Characters | What it represents | In this example |
|---|---|---|---|
| 1–2 | 2 digits | Chapter (Broad product category, 1 of 99) | 85 = Electrical machinery |
| 3–4 | 2 digits | Heading (Specific product group) | 8517 = Telephone sets |
| 5–6 | 2 digits | Sub-heading (Narrower WCO level) | 851712 = Cellular telephones |
| 7–8 | 2 digits | Tariff item (India-specific) | 85171219 = Smartphones |
Example: Cotton T-shirt — HSN 61091000
| Digits | What it means |
|---|---|
| 61 | Knitted or crocheted clothing |
| 6109 | T-shirts, singlets, and other vests |
| 610910 | Of cotton |
| 61091000 | Cotton T-shirts, national tariff item |
For domestic GST invoices, you only need the first 4 digits (chapter + heading) if your turnover is under ₹5 crore, or the first 6 digits (chapter + heading + sub-heading) if your turnover exceeds ₹5 crore. The full 8 digits are required only for imports and exports.
How many HSN digits are mandatory on your invoice
The number of digits you must print on a GST Tax Invoice depends on your Annual Aggregate Turnover (AATO) from the previous financial year, as mandated by CGST Notification No. 78/2020 (effective 1 April 2021):
| Annual Aggregate Turnover (Previous FY) | HSN digits on B2B Invoice | HSN digits on B2C Invoice |
|---|---|---|
| Up to ₹5 crore | 4 digits (mandatory) | Optional |
| Above ₹5 crore | 6 digits (mandatory) | 6 digits (mandatory) |
| Exports and imports (all turnover levels) | 8 digits (mandatory) | 8 digits (mandatory) |
What this means in practice:
A small business with turnover of ₹80 lakh selling stationery items must print at least a 4-digit HSN code on all B2B invoices (e.g., 4820 for notebooks). For their B2C invoices (selling to end consumers), the HSN code is optional but recommended for clean return filing.
A larger business with ₹8 crore turnover selling electronic goods must print 6-digit HSN codes on every invoice — both B2B and B2C — and report them at 6 digits in GSTR-1 Table 12.
New businesses: For your first year of registration, use the HSN threshold applicable to your projected turnover. Once your first full FY is complete, apply the rule based on actual AATO from the previous year.
HSN vs SAC: what is the difference
This is the single most common classification confusion for Indian businesses and freelancers.
| HSN Code | SAC Code | |
|---|---|---|
| Full form | Harmonized System of Nomenclature | Services Accounting Code |
| What it classifies | Physical goods only | Services only |
| Developed by | World Customs Organization (WCO) | CBIC, India |
| Number of digits | Up to 8 digits | Always 6 digits |
| Starting digits | 01 to 99 (chapter number) | Always starts with 99 |
| International? | Yes — used globally | India-specific |
| Example | 0901 = Coffee | 998314 = IT consulting services |
| Who uses it | Traders, manufacturers, importers, exporters | Freelancers, agencies, consultants, service providers |
How to tell which one you need:
If you are selling a physical, tangible product that can be touched and shipped — it needs an HSN code. If you are selling a service — a deliverable, a skill, a subscription, an outcome without a physical object — it needs a SAC code.
Mixed supplies (e.g., a laptop sold with a 1-year maintenance contract) carry both an HSN code for the laptop and a SAC code for the maintenance service, reported separately on the invoice.
HSN code chapters: the 21 sections
The 99 chapters of the HSN system are grouped into 21 Sections. The chapter number forms the first two digits of any HSN code. Here are the most commercially relevant chapters for Indian businesses:
| Chapter | Category | Common products | GST Rate |
|---|---|---|---|
| 01–05 | Live animal products | Meat, dairy, eggs | Mostly 0% / 5% |
| 07–08 | Vegetables and fruits | Fresh produce | 0% (most) |
| 09 | Coffee, tea, spices | Coffee (0904), tea (0902) | 5% |
| 21 | Misc food preparations | Instant noodles, sauces | 18% |
| 30 | Pharmaceutical products | Medicines (3004) | 5% / 18% |
| 33 | Cosmetics and toiletries | Shampoo, perfume (3303/3305) | 18% |
| 39 | Plastics and articles | Packaging materials (3923) | 18% |
| 48 | Paper and paperboard | Notebooks (4820), stationery | 12% / 18% |
| 61–62 | Garments and clothing | T-shirts (6109), trousers (6203) | 5% / 12% |
| 64 | Footwear | Shoes (6403), sandals (6402) | 5% / 12% / 18% |
| 73 | Iron and steel articles | Tools, hardware (7318) | 18% |
| 84 | Machinery and mechanical | Computers (8471), printers (8443) | 18% |
| 85 | Electrical and electronics | Phones (8517), TVs (8528) | 18% |
| 87 | Vehicles | Cars (8703), two-wheelers (8711) | 28% + Cess |
| 90 | Optical/medical instruments | Spectacles (9004), cameras (9006) | 12% / 18% |
| 94 | Furniture | Office furniture (9403) | 18% |
| 95 | Toys and games | Toys (9503) | 18% |
GST 2.0 (effective 22 September 2025): The GST Council's rate rationalisation eliminated the 12% slab for most goods, moving them to either 5% or 18%. A new 40% rate applies to luxury and sin goods. Always verify the current rate for any specific HSN code at cbic-gst.gov.in before invoicing.
How to find the correct HSN code for your product
Method 1 — GST Portal search tool (recommended)
Go to services.gst.gov.in/services/searchhsnsac — no login required. Enter a keyword describing your product (e.g., "notebook", "cotton shirt", "mobile phone"). The tool returns matching HSN codes, descriptions, and the applicable GST rate.
Method 2 — CBIC GST rate schedule
Download the official GST Rate Schedule from cbic-gst.gov.in/gst-goods-services-rates.html. This is the authoritative document — it lists every good, its HSN code, and its current GST rate after the September 2025 rationalisation.
Method 3 — Tally / ClearTax / your accounting software
Most GST accounting software has an in-built HSN lookup. Search by product name, confirm the 8-digit code, and your software will auto-apply the correct GST rate.
Method 4 — Consult your CA for ambiguous products
Some products fall across multiple chapters (e.g., a food supplement that is also a medicine). When the classification is genuinely ambiguous, seek a formal opinion from your CA or apply for an Advance Ruling from the GST Authority for Advance Rulings in your state. Using the wrong HSN code for a product is a penalty risk.
Never guess an HSN code. Using an incorrect HSN code can lead to wrong GST rate being applied, ITC being blocked for your buyer, scrutiny notices, and penalties. The penalty under Section 125 is ₹50 per invoice with a ₹25,000 annual cap — small per invoice, but it adds up fast for high-volume sellers.
HSN codes in GSTR-1: Table 12 (Phase 3, May 2025 onwards)
When you file GSTR-1, you must report an HSN-wise summary of all supplies in Table 12. GSTN implemented Phase 3 of mandatory HSN reporting effective from the May 2025 return period (filed in June 2025), introducing significant changes:
What changed in Phase 3:
Table 12 is now split into two separate tabs: B2B Supplies and B2C Supplies. You must report HSN-wise summary under each tab separately. Previously, all supplies were reported in a single combined HSN table.
Dropdown-only selection: Manual free-text entry of HSN codes in Table 12 is no longer permitted. You must select HSN codes from the official GSTN dropdown list. This prevents typographical errors and ensures only valid codes are reported. GSTN provides a downloadable Excel file of all valid HSN and SAC codes via the "Download HSN Codes List" button in Table 12.
Table 13 now mandatory: Table 13 (document summary — listing all invoices, credit notes, debit notes, and delivery challans issued in the period) has been made compulsory from May 2025. It was previously optional.
HSN digits enforced by system: The portal now validates the digit count based on your AATO — 4-digit HSN for turnover up to ₹5 crore, 6-digit for above ₹5 crore. Entering a 2-digit (chapter-only) code is no longer accepted.
HSN on Tax Invoices: the compliance requirement
Under Rule 46(k) of the CGST Rules, the HSN code of goods supplied is a mandatory field on every Tax Invoice. The specific requirement:
- B2B invoices (any turnover): HSN code mandatory (4 or 6 digits based on turnover)
- B2C invoices (turnover ≤ ₹5 crore): Optional
- B2C invoices (turnover > ₹5 crore): Mandatory (6 digits)
- Export invoices (all turnover): 8-digit HSN mandatory
The HSN code typically appears in the line-item section of the invoice, in the column for product/service description. On e-invoices (for businesses with turnover above ₹5 crore), the HSN code is a required field in the JSON schema submitted to the Invoice Registration Portal — a missing or invalid HSN will cause the IRP to reject the e-invoice.
Practical example: Rohit's electronics accessories business
Rohit runs a small business in Pune selling phone cases, screen protectors, and USB cables. His annual turnover is ₹1.2 crore (under ₹5 crore). He sells to both retailers (B2B) and end consumers (B2C).
| Product | HSN Code | GST Rate | Invoice requirement |
|---|---|---|---|
| Phone case (plastic) | 3926 (articles of plastics) | 18% | 4-digit HSN on B2B invoices; optional on B2C |
| Screen protector (glass) | 7007 (safety glass) | 18% | 4-digit HSN on B2B invoices |
| USB cable | 8544 (insulated wire/cable) | 18% | 4-digit HSN on B2B invoices |
| Packaging box (cardboard) | 4819 (boxes of paper) | 12% | 4-digit HSN on B2B invoices |
When Rohit files GSTR-1 for the month, he reports the HSN-wise summary in Table 12:
- Under B2B tab: HSN 3926 (₹X taxable value, 18% rate), HSN 7007 (₹Y), HSN 8544 (₹Z), HSN 4819 (₹W at 12%)
- Under B2C tab: same HSN codes but only for B2C transaction value totals
If Rohit's turnover crosses ₹5 crore in the next FY, he must upgrade to 6-digit HSN codes on all invoices from 1 April of the following year.
Common HSN code mistakes Indian businesses make
Using the chapter-level 2-digit code instead of 4 or 6 digits. A business writing "85" (the chapter for electrical machinery) instead of "8517" (telephones) on invoices is technically non-compliant. The GST portal now blocks 2-digit entries in Table 12 under Phase 3.
Applying a goods HSN code to a service or vice versa. A software agency invoicing for a custom application with HSN code 8523 (recorded media) instead of SAC 998314 (software development services) is mis-classifying the supply. This can lead to wrong GST rate application.
Using an outdated HSN code. The WCO periodically revises the HSN system (HS 2022 was the last major update). CBIC aligns India's tariff schedule with these updates. Always verify that the HSN code you are using is active and not deprecated.
Not updating HSN digits after crossing the ₹5 crore threshold. A business that crossed ₹5 crore turnover in FY 2024-25 must use 6-digit HSN codes from FY 2025-26 onwards. Many businesses miss this annual recalibration.
Entering the wrong rate based on an incorrect HSN code. Two similar products can attract different GST rates based on their exact classification. For example, footwear priced under ₹1,00,000 per pair (HSN 6401) attracts 5% GST, while footwear above ₹1,00,000 (same chapter, different heading) attracts 12% or 18%. Using the wrong HSN code may mean you are charging the wrong rate — creating liability or ITC mismatches for your buyer.
Frequently asked questions
What is an HSN code?
HSN stands for Harmonized System of Nomenclature. An HSN code is a numeric classification code assigned to every physical good under India's GST system. It is part of an international system developed by the World Customs Organization in 1988 and used in over 200 countries for trade and taxation purposes. In India, HSN codes appear on Tax Invoices, determine the applicable GST rate, and are reported in GSTR-1's HSN summary table (Table 12). Businesses with turnover up to ₹5 crore must use 4-digit HSN codes on B2B invoices; businesses above ₹5 crore must use 6-digit codes on all invoices; imports and exports always require 8 digits.
What is the difference between HSN code and SAC code?
HSN codes classify physical goods (products you can touch and ship), while SAC codes classify services (consulting, design, software, etc.). HSN codes are internationally standardised and up to 8 digits. SAC codes are India-specific and always 6 digits, all starting with "99". A freelancer selling design services uses SAC 998312. A business selling stationery uses HSN 4820. A business selling both a product and an installation service on the same invoice must report both an HSN code (for the goods) and a SAC code (for the service) separately.
How do I find the HSN code for my product?
The easiest method is the free GST portal lookup at services.gst.gov.in/services/searchhsnsac — enter a keyword and it returns matching HSN codes with descriptions and GST rates. The CBIC rate schedule at cbic-gst.gov.in is the authoritative source. For products where classification is genuinely ambiguous (food-supplements, multi-purpose devices), consult a CA or apply for an Advance Ruling from the Authority for Advance Rulings in your state.
Is HSN code mandatory on every invoice?
For B2B invoices (to GST-registered buyers): yes, mandatory regardless of turnover — either 4 or 6 digits depending on your AATO. For B2C invoices (to unregistered end consumers): mandatory only if your AATO exceeds ₹5 crore; optional below that. For export invoices: always mandatory at 8 digits.
What happens if I put the wrong HSN code on my invoice?
A wrong HSN code on a Tax Invoice can result in your buyer claiming ITC at an incorrect GST rate, triggering ITC reversal and interest for your buyer if detected during reconciliation. For you, the penalty is ₹50 per invoice under Section 125 of the CGST Act, subject to a ₹25,000 annual cap. In addition, a wrong HSN code in GSTR-1 may attract a scrutiny notice from the GST department, particularly if the reported rate does not match the rate applicable to the correct HSN code.
What changed in HSN code reporting in GSTR-1 from May 2025?
GSTN implemented Phase 3 of HSN reporting in Table 12 of GSTR-1/1A from the May 2025 return period. Table 12 was bifurcated into separate B2B and B2C tabs, requiring HSN-wise summary to be reported separately for each. Manual free-text entry of HSN codes was disabled — codes can only be selected from the official GSTN dropdown list. Table 13 (document summary) was made mandatory. The portal also began enforcing minimum digit requirements (4 digits for AATO up to ₹5 crore, 6 digits above) and blocking sub-4-digit (chapter-only) entries.
Do I need HSN codes if I only sell services?
No. If your business exclusively provides services (freelancing, consulting, software development, etc.), you use SAC codes, not HSN codes. SAC codes are the services equivalent of HSN codes and follow the same digit-count rules: 4 digits if AATO ≤ ₹5 crore on B2B invoices, 6 digits if AATO > ₹5 crore on all invoices. HSN codes are only relevant if you sell or purchase physical goods.
What is the penalty for not putting an HSN code on a GST invoice?
Under Section 125 of the CGST Act (general penalty for contravention), the penalty for a missing or incorrect HSN code is ₹50 per invoice, subject to a maximum of ₹25,000 per year. Beyond the direct penalty, a missing HSN code can invalidate the invoice for ITC purposes at your buyer's end — they may be unable to claim Input Tax Credit on an invoice that lacks mandatory fields under Rule 46.
Related terms
SAC Code · Tax Invoice · GST Rate · GST · GSTR-1 · Input Tax Credit · E-Invoice · GSTIN · Place of Supply · Freelancer Invoice
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