If you want to know the meaning of HSN code and why it’s important.
You are on the right page!
This article will help you to understand what is HSN code? Here I explained what HSN numbers are in 2 digit, 4 digits, and 6 digits numbers.
Hello, friends welcome to another fresh article on “Indiancustoms.info”, Here in this article I explained the meaning of HSN code and why it is important in import-export and GST.
If you are an importer/exporter or businessman, you need to understand what is HSN number is and how the wrong HSN number will impact your business.
All goods and services come under the HSN number, If you classify goods or services under the wrong HSN number, It impacts your business directly.
So, every businessman needs to understand the importance of HSN number and how it works for their business.
Now let’s take a look at what is HSN code or what is the meaning of HSN code?
What Is HSN code?
The full form of HSN is Harmonized System Nomenclature, HSN number is used for the classification of goods and services.
HSN is also known as HS code, CTH, ITC HS code, etc…
The Harmonized System Nomenclature (HSN) code is used worldwide to classify goods for taxation purposes.
HSN number for each commodity is accepted by most of the countries and the said HSN number remains the same for almost all goods.
However, the HSN number used in some of the countries varies little, based on the nature of goods classified.
In India, HSN codes are used for customs clearance of imports and exports shipments.
With help of HSN, it’s easy to identify the classification of goods and collect customs duties and other taxes from importers and exporters also claimed drawbacks and other incentives schemes.
After the implementation of GST ( Goods and Service Tax ) in India, HSN codes are also used for GST purposes, the same classification code (HSN) is adopted for classifying Goods and Service Tax (GST).
Now in India HSN number is also used to classify goods to compute the value-added tax. It’s mandatory to mention the HSN number when preparing a Tax Invoice for GST.
How Many Digits Used In HSN code?
There is total 21 section of HSN numbers are used to classify products, These 21 sections of HSN code are sub-classified into 99 chapters.
Each chapter is a two-digit HSN number which is known as chapter heading and each two-digit HSN code is classified in 4 digit HSN code which is known as sub-headings.
Based on such 4 digit HSN number, the sub-classification is done as 6 digits HSN number.
Worldwide most of the countries are using 6 digit HSN numbers to classify goods, but some countries additionally add 2 digits in the last part of such HSN number and it will become 8 digit HSN number.
I hope now you understand HSN numbers are mainly used for taxation purposes especially for the import and export of goods.
In India, 6 digit HSN numbers are used for export and import.
I hope you understand what is the meaning of the HSN code and what it important for businessmen. If anyone has any suggestions or queries please comment in the comment box.