HSN Code Under GST
In this artical you will know about HSN Codes,How HSN codes work and their Importance, and much more.
Last updated
In this artical you will know about HSN Codes,How HSN codes work and their Importance, and much more.
Last updated
The HSN code means "harmonic system of nomenclature" and was implemented in 1988 by the WCO (World Customs Organization). The main objective of the WCO to introduce HSN codes is to classify all goods in an orderly manner. It eliminates confusion and helps in domestic and international trade between countries. More than 20,000 goods are traded between countries worldwide using the HSN code. More than 90% of the WCO of world trade is done using the revised HSN code. India has also been included in the community by accepting the HSN code process.
The primary purpose of the HSN is a systematic classification of goods. HSN Code can also be used to gather all the data and solve any problems that may crop up. HSN and imports and exports standardize Codes as accepted in the global platform have been adopted. The use of HSN codes minimizes the cost and simplifies the customs procedure. The result of which is a more efficient national & international trade system. The HSN codes help all the taxpayers to know about GST rates against a particular product. It is mandatory to mention the HSN codes while filling the GSTR forms. HSN is being used all over the world.
The HSN code is used primarily by dealers and merchants. They should adopt 2 digits, 4 digit, and 8 digit HSN codes based on the following criteria.
If the business turnover is less than Rs.1.5 crore, then there is no need to adopt an HSN code.
If the business's turnover is between Rs 15 crore to 5 Crs, they should adopt the 2 digit HSN code for the business.
If the business's turnover is more than Rs 5 crore, they have to adopt the 4 digit HSN code for the business.
In import and export transactions and international trade, one should adopt an 8-digit HSN code for trade.
The HSN code is present for every item in every country, and the number is the same for almost all items. In some countries, this HSN number may vary slightly as they are based solely on the nature of the classified items.
This impressive adoption rate can be carried over to the benefits of HSN, including -
The collection of international trade data.
The provision of a rational basis for customs duties.
The classification of uniforms.
About 98% of the HSN international trade stock.
It consists of 21 sections, with 99 chapters, approximately 1,244 headings, 5,224 5224 Subdivisions.
There are about 21 groups in each section in the HSN code, all divided into 99 chapters. After that, all the chapters are divided into headings which are about 1244 in number. All the titles are then divided into 5224 subdivisions. The code operates in the following way: All chapters are designated as two-digit HSN numbers, then two-digit HSN numbers are subclassified into four-digit HSN codes. Every good is assigned with a unique 6-digit code. There are 2 more digits in India added to these 6 for further classification by the Indian taxation system.
All goods and services are classified into 21 sections and 99 chapters. Chapters 1244 are again in subsections. The given HSN codes give the GST tax rates levied on those items.
Disclaimer: This article is intended for general consumption only. The information in the article was accurate at the time of publication, but it is subject to change due to changes in government rules and regulations. The contents of the blog may not be copied unless prior permission is obtained.
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