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Sunday, June 16, 2019

Goods and Services Tax(GST) - All you need to know about HSN code

What is HSN code?



Harmonised System of Nomenclature [HSN] is a six digit uniform code that classifies 5000 + products worldwide. It was thought of and developed by the World Customs Organization [WCO] with a vision of standardizing the classification of all the goods prevailing worldwide, in a logical and systematical manner. 

HSN plays a crucial role in the taxation of a country and helps to get the accurate rate of tax applicable on any product in a country. 

HSN is also referred to analyze a specific product movement across the world and assists in determining the volume of any product exported or imported.

The six digit code is an organized amalgamation of different sections – drilled down to chapters – further classified into headings and sub headings.

HSN in Indian Context:

The new generation, GST module in India is designed for syncing only with the HSN codes and every product or service will get classified accordingly. Although, the Central Excise and Customs department has been using since 1986, however, the new GST regime has 2 more digits added to it, giving it furthermore clarity. The Indian businesses will use a 3 layered HSN configuration.

Applicability of HSN:

Decoding Digits of the HSN Code:

The entire HSN module consists of 21 sections, which have 99 chapters, broken down into about 1244 headings and 5224 sub-headings





>The draft list of HSN codes released and available in the public domain can be assessed on the government GST website.

>Under the GST laws, the services will be classified as per the Services Accounting Code(s) (SAC).

Primary benefit of HSN codes
When goods and offerings are recognised via their specific HSN codes, which are globally acceptable, the identification of goods becomes easy, and resultantly possibilities of misinterpretation tend to reduce.

While filing GST returns online, HSN code in respect of the supply of goods and Services Accounting Code in respect of the supply of services will have to be uploaded, and there will be no need for entering the description of the goods or services while filing GST returns.

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