Glossary · also called HSN, Harmonised System of Nomenclature, HSN/SAC code
What is an HSN Code under GST?
HSN code: An HSN code (Harmonised System of Nomenclature) is an internationally used numeric code that classifies goods. Under Indian GST, HSN codes identify the applicable tax rate for a product and must be shown on tax invoices and reported in GSTR-1, with the number of digits required depending on the business's annual turnover.
Definition
The Harmonised System is maintained by the World Customs Organization and used by most countries for customs. India uses it, extended to 8 digits, for customs tariffs and for GST. The first 2 digits are the chapter, 4 digits the heading, 6 digits the sub-heading, and 8 digits the national tariff item.
Services are classified differently, using SAC (Services Accounting Code), which in GST begins with 99. Construction works, for example, fall under SAC heading 9954.
How it works
On B2B tax invoices, the current requirement is broadly:
- Aggregate turnover up to ₹5 crore in the previous financial year: at least a 4-digit HSN code.
- Aggregate turnover above ₹5 crore: a 6-digit HSN code.
HSN codes also appear in the HSN-wise summary in GSTR-1, which must be consistent with your invoices. Requirements change from time to time, so confirm the current rules with your tax advisor.
An illustrative example for a panel manufacturer:
| Product | Typical HSN heading | Notes |
|---|---|---|
| LV control or distribution panel | 8537 | 8537 10 for voltage up to 1,000 V |
| Circuit breakers, contactors (up to 1,000 V) | 8536 | Bought-in components |
| Power capacitors | 8532 | For APFC panels |
These are examples, not tax advice. The correct code depends on the exact product, and the GST rate is the applicable rate for that classification, which can change.
Common mistakes
- Using a code copied from a supplier without checking it describes what you sell. A finished panel is not classified as its components.
- Too few digits for your turnover band.
- Inconsistent codes for the same product across invoices, which shows up in the HSN summary.
- Classifying a works contract as goods. Contractors supplying construction services generally use SAC, not HSN.
In Zaptiz
Zaptiz Electrical prints HSN on GST invoices along with CGST/SGST/IGST, and its GST agent prepares and checks GSTR-1 and GSTR-3B figures for review — it never files. Product classification is still yours to confirm. Panels such as an APFC panel are invoiced from the same product master used in the BOM.