A GST taxpayer having turnover of more than Rs 5 crore in the preceding financial year will have to furnish 6 digits Harmonised System of Nomenclature Code (HSN Code), or Service Accounting Code (SAC) from April 1, 2021 on the invoices issued for supplies of taxable goods and services.
- A taxpayer having turnover of upto Rs 5 crore in the preceding financial year is required to mandatorily furnish 4 digits HSN code on B2B invoices.
- Earlier, the requirement was 4 digits and 2 digits.
- HSN codes for goods at 6 digits are universally common. Therefore, common HSN codes apply to Customs and GST.
- Manufacturers and importers or exporters have been commonly using HSN Codes. Manufacturers were furnishing these codes even in the pre-GST regime. Importers and exporters have been furnishing these codes in import or export documents.
- The World Customs Organization developed HSN Code as a multipurpose international product nomenclature that first came into effect in 1988 with the vision of facilitating the classification of goods all over the World in a systematic manner.
- HSN is a six-digit code that classifies more than 5000 products, arranged in a legal and logical structure.
- HSN classification is widely used for taxation purposes by helping to identify the rate of tax applicable to a specific product in a country that is under review.
