HSN Code: Definition, Full Form, Lists, and Structure, Uses

Discover HSN code's definition, full form, usage, lists and structure. Learn how it categorises goods for taxation to simplify your business processes.
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HSN Code: Definition, Full Form, Lists, and Structure, Uses
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3 min
07 November 2025

HSN, or the Harmonized System of Nomenclature, is a globally recognized framework for systematically classifying goods. Developed by the World Customs Organization (WCO), it serves as the international standard for naming and categorizing products. In India, HSN is essential for businesses to streamline operations and ensure compliance with the updated Goods and Services Tax (GST) system, particularly following the simplifications introduced on September 22, 2025.

Business financing, such as a business loan, can play a crucial role in adopting advanced ERP or accounting software to manage HSN code compliance under the GST 2.0 regime. The tax rate revisions effective September 22, 2025 — moving from the 12% and 28% slabs to the new 5% and 18% structure — require companies to promptly update their product catalogs and billing systems. Funding can be used to implement system upgrades, train staff, and ensure accurate mapping of HSN codes to the revised GST rates, supporting correct tax calculation and full regulatory compliance.

What is HSN code?

HSN code is a numerical system used to classify goods internationally. It assigns a unique code to each product based on its characteristics like composition, purpose, or function. This classification simplifies the process of categorising goods for taxation, customs, and other regulatory purposes, making trade smoother and more efficient.

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Why is HSN important?

HSN codes play a crucial role in international trade and taxation systems. They facilitate uniformity in classifying goods, and simplifying processes like invoicing, customs clearance, and taxation. For businesses, accurate HSN classification ensures compliance with regulations, reduces errors, and streamlines operations, ultimately contributing to cost-effectiveness and efficiency.

HSN Worldwide

The HSN system is utilised by over 200 countries and economies for various purposes, including uniform classification, serving as a foundation for Customs tariffs, and aiding in the collection of international trade statistics. More than 98% of globally traded merchandise is classified using the HSN. The Harmonized System of Nomenclature number is widely accepted across most countries and remains consistent for nearly all goods. However, in some cases, the HSN number may vary slightly depending on the nature of the goods being classified.

HSN in India

India has been a member of the World Customs Organization (WCO) since 1971. Initially, the country used 6-digit HSN codes to classify commodities for Customs and Central Excise purposes. To enhance precision, two additional digits were later introduced by Customs and Central Excise, resulting in an 8-digit classification system.

How does HSN code work?

  • HSN codes consist of a series of numbers.
  • The first two digits represent the chapter, indicating the broader category of goods.
  • The next two digits denote the heading, specifying the type of product within the chapter.
  • Subsequent digits provide further detail, down to a specific product level.

Example of HSN code

Product: Cotton T-shirts

HSN Code: 6109

Explanation:

  • The HSN code (6109) is crucial for accurate categorisation of goods in GST returns (GSTR).
  • In the HSN system, the first two digits (61) represent the chapter, which is "Articles of Apparel and Clothing Accessories, Knitted or Crocheted".
  • The next two digits (09) represent the heading, specifically pertaining to "T-shirts, singlets, and other vests, knitted or crocheted".
  • Incorporating the correct HSN code streamlines the process of GST return filing, ensuring compliance and accuracy in business transactions.

Structure of HSN code in India

HSN (Harmonized System of Nomenclature) codes are crucial for classifying goods in international trade. In India, HSN codes consist of 8 digits, where the first two digits denote the chapter number, the next two digits indicate the heading number, the subsequent two digits specify the sub-heading, and the final two digits detail the tariff item. This hierarchical structure allows for precise categorization of goods, aiding in uniformity and clarity across various industries. Businesses rely on HSN codes to accurately classify their products for tax purposes and regulatory compliance. Understanding this structured approach is essential for ensuring correct classification of goods, facilitating smoother trade operations, and adhering to legal requirements within India's GST framework.

HSN code list for GST India

The GST Council has streamlined HSN-based tax rates, consolidating them into the new slabs: 0%, 5%, 18%, and 40%. The changes affect a wide range of goods across multiple HSN chapters.

Section

HSN Chapter Range

Description of Commodities

New GST Rates

I

01–05

Live animals; animal products

0%, 5%, 18%

II

06–14

Vegetable products

0%, 5%, 18%

III

15

Animal or vegetable fats and oils

5%, 18%

IV

16–24

Prepared foodstuffs; beverages, spirits, tobacco

0%, 5%, 18%, 40%

V

25–27

Mineral products (e.g., cement)

5%, 18% (cement reduced from 28% to 18%)

VI

28–38

Chemicals and allied products

0%, 5%, 18%, 40%

VII

39–40

Plastics, rubber, and related articles

5%, 18%

VIII

41–43

Raw hides, leather, and fur

5%, 18% (leather/footwear ≤ ₹2,500 reduced to 5%)

IX

44–46

Wood, cork, and related articles

5%, 18%

X

47–49

Paper, paperboard, and related articles

0%, 5%, 18% (pencils, notebooks, maps often 0%)

XI

50–63

Textiles and textile articles

5%, 18% (most textiles/apparel ≤ ₹2,500 at 5%)

XII

64–67

Footwear, headgear, umbrellas

5%, 18% (most footwear ≤ ₹2,500 at 5%)

XIII

68–70

Ceramic products and glassware

5%, 18%

XIV

71

Precious metals, stones, jewellery

0%, 3%, 5%, 18%

XV

72–83

Base metals and utensils

5%, 18% (many daily-use items at 5%)

XVI

84–85

Machinery and appliances (ACs, TVs, refrigerators)

5%, 18% (consumer durables reduced from 28% to 18%)

XVII

86–89

Vehicles, aircraft, vessels

5%, 18%, 40% (small cars, ≤350cc bikes at 18%; luxury/sin goods 40%)

XVIII

90–92

Optical, photographic, medical instruments

0%, 5%, 18% (life-saving medicines/devices 0–5%)

XIX

93

Arms and ammunition

5%, 18%, 40% (high-end arms at 40%)

XX

94–96

Miscellaneous manufactured goods (FMCG)

5%, 18% (personal care, household items reduced to 5%)

XXI

97

Works of art, collectors’ items, antiques

5%, 18%


Key Highlights of Rate Rationalisation:

  • New Slabs: 5% for essentials/merit goods, 18% for standard items, 40% for luxury/sin goods.
  • Expanded 0% Exemptions: Items like UHT milk, pre-packaged paneer, roti/chapati, pencils, notebooks, and individual health/life insurance.
  • Major 5% Reductions: Butter, ghee, packaged foods (namkeen, biscuits, chocolates, coffee), soaps, shampoos, toothpaste, utensils, mass-market footwear/apparel ≤ ₹2,500.
  • Major 18% Reductions: Consumer durables (ACs, TVs, washing machines, refrigerators), cement, small cars, motorcycles ≤ 350cc.
  • New 40% Slab: Applied to luxury and sin goods, including high-end vehicles, motorcycles > 350cc, aerated drinks, and casinos, consolidating the Compensation Cess.

HSN in GST

HSN (Harmonised System of Nomenclature) codes are essential for Goods and Services Tax (GST) in India. They categorise goods based on their characteristics and facilitate uniform taxation. Understanding HSN codes ensures accurate tax calculation and compliance with GST regulations.

Usage of the HSN code for GST

The HSN reporting requirements under GST, based on a business’s annual turnover, are as follows:

  • Turnover up to Rs. 5 Crore: 4-digit HSN must be mentioned on invoices for B2B transactions.
  • Turnover above Rs. 5 Crore: 6-digit HSN is mandatory on all invoices.
  • Imports/Exports: The complete 8-digit HSN or ITC-HS code is required.

HSN codes are crucial for linking products to the revised GST rates (0%, 5%, 18%, 40%), ensuring accurate tax calculation and smoother invoicing. Using a GST calculator can simplify these computations.

How can businesses implement HSN codes in their process?

Implementing Harmonized System of Nomenclature (HSN) codes is crucial for businesses for smooth GST compliance and operations.

  • The process involves categorising offerings and understanding the structure of HSN codes.
  • Staff should receive proper training to accurately assign codes to products.
  • Integration of HSN codes in ERP systems helps reduce errors.
  • Regular updates on changes in GST rates and HSN codes should be conducted.
  • Inclusion of HSN codes in all invoices is mandatory for GST compliance.
  • Collaboration among departments is necessary, along with record maintenance, engagement with suppliers and vendors.
  • Frequent compliance checks, reviews, audits, and seeking professional advice when needed are essential.

Declaration of HSN code for Goods and Services

In accordance with GST regulations, businesses are required to declare the appropriate HSN (Harmonised System of Nomenclature) code for all goods and services supplied. This declaration ensures uniformity and accuracy in tax assessment and facilitates smoother compliance with GST requirements. By correctly identifying and declaring HSN codes, businesses can streamline their invoicing processes, enhance transparency in transactions, and mitigate the risk of errors or discrepancies in tax filings. It is essential for businesses to stay updated with HSN code revisions and maintain accurate records to comply effectively with GST regulations.

How to add HSN code in the GST portal?

Here are the steps to add an HSN code in the GST portal:

  • Step 1: Login to the GST portal using your credentials.
  • Step 2: On the dashboard, navigate to ‘Services’ > ‘Registration’ > ‘Amendment of Registration Non-core fields’.
  • Step 3: Click on the ‘Goods and Services’ tab.
  • Step 4: Select the ‘Goods’ tab.
  • Step 5: Search for the relevant HSN chapter by entering the HSN code or name of the item.
  • Step 6: Click on ‘Save and continue’. Continue clicking on the ‘Save’ button until you complete all necessary details.
  • Step 7: Complete the verification process and submit the amendment either via Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

What is the difference between the HSN Code and the HS Code?

HSN and Harmonised System Code (HS Code) are essentially the same in the context of customs and shipping. The World Customs Organization (WCO) introduced this international product nomenclature in 1988 to facilitate systematic global goods classification. While the 6-digit codes are commonly referred to as HS Codes worldwide, in India, they are known as HSN Codes.

India, a WCO member since 1971, initially used the 6-digit HSN code for Customs and Central Excise duties. To improve the precision of goods classification for import, export, and taxation purposes, two additional digits were later added, creating an 8-digit classification known as the ITC-HS Code (Indian Trade Clarification based on Harmonized System of Coding). This extended code is sometimes still called HSN Code. It’s important to note that the ITC-HS Code is identical to the HS Code except for the final two digits.

Conclusion

Understanding and correctly declaring HSN codes for goods and services are crucial aspects of complying with GST regulations. It ensures accurate tax assessment, facilitates smoother transactions, and reduces the risk of errors. For businesses looking to streamline their operations or expand their ventures, exploring options like a business loan can provide the necessary financial support to effectively manage their compliance requirements and drive growth.

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Frequently asked questions

What is the difference between an HSN code and a SAC code?
HSN (Harmonised System of Nomenclature) code is used to classify goods, while SAC (Services Accounting Code) is used to classify services. HSN codes are numeric and globally accepted, whereas SAC codes are alphanumeric and specific to India's service tax regime.
What is the full form of HSN?
HSN stands for Harmonised System of Nomenclature.
Who is eligible for HSN code in GST?
Any business engaged in the supply of goods and services under the GST regime is eligible for an HSN code. This includes manufacturers, traders, service providers, and importers/exporters.
What is HS and HSN code?
HS (Harmonised System) is an international classification system for goods, while HSN (Harmonised System of Nomenclature) code is a subset of HS codes. HSN codes provide a more detailed classification, making them suitable for tax purposes under GST.
Is the HSN code mandatory for GST?
HSN code is mandatory for businesses with an annual turnover exceeding a certain threshold under GST regulations. However, businesses with a turnover below the threshold may opt not to mention HSN codes in their invoices.
Where can I find my HSN code?
HSN codes for goods are available on the GST portal and can also be found in the GST rate schedule issued by the government. Businesses can determine their HSN codes based on the nature of their products or seek assistance from tax professionals. SAC codes for services are available on the GST portal as well.
What is the limit for HSN code?

The limit for using HSN (Harmonized System of Nomenclature) codes in GST reporting varies based on the annual turnover of a business. For businesses with an annual turnover exceeding ₹5 crores, it is mandatory to use 6-digit HSN codes. Meanwhile, businesses with a turnover below this threshold can use 4-digit HSN codes. It's essential for businesses to accurately report their HSN codes to ensure compliance with GST regulations and avoid potential penalties.

Can a product have two HSN codes?

Yes, a product can have two HSN codes if it falls under different classifications based on its variations or uses. For instance, a product might be classified differently depending on its composition or purpose. When registering a product, businesses should provide the appropriate HSN codes that accurately reflect the nature of the product. This ensures correct tax treatment and compliance with GST regulations, helping to avoid confusion and potential issues during audits or assessments.

What is the penalty for HSN code?

Failure to comply with HSN code reporting requirements can result in penalties under the GST framework. For businesses that do not report the correct HSN codes, fines can range from ₹50,000 to higher amounts depending on the severity and recurrence of the violation. Additionally, incorrect reporting may lead to increased scrutiny from tax authorities, which could result in further complications. It's crucial for businesses to maintain accurate records and adhere to HSN code regulations to avoid such penalties.

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