HSN Code
Definition
Harmonized System of Nomenclature — an internationally standardized system for classifying traded products. Used in GST to classify goods and determine applicable tax rate. 4-digit HSN for turnover >₹5Cr, 2-digit for ₹1.5-5Cr.
Why is HSN Code Important?
Navigating the Indian tax system requires a clear understanding of terms like HSN Code. With the introduction of the new income tax regime alongside the old one, taxpayers must evaluate their deductions, exemptions, and tax brackets carefully. This concept is a key component in optimizing your tax liabilities under the Income Tax Act and GST framework.
Proper tax planning using this metric can help individuals and businesses maximize their take-home income while remaining fully compliant with government regulations. We provide free tax calculators to help you estimate these figures accurately and make informed decisions before filing your returns.
What is an HSN Code?
HSN (Harmonized System of Nomenclature) is an internationally standardized system of names and numbers to classify traded products. In India, HSN codes are used in GST invoices to identify the applicable tax rate on goods.
HSN Code Requirements Under GST
| Annual Turnover | HSN Digits Required |
|---|---|
| Up to ₹5 crore | 4-digit HSN on B2B invoices |
| Above ₹5 crore | 6-digit HSN on all invoices |
HSN Code Structure
Example: 6203.42.10
- 62: Chapter (Articles of apparel — not knitted)
- 6203: Heading (Men's suits, trousers)
- 6203.42: Sub-heading (Trousers — cotton)
- 6203.42.10: Tariff item (specific product)