Glossary
What is an HSN code?
The number that tells GST what a product is, and so what rate it carries.
Updated
In short
An HSN code is the number that classifies goods for GST and customs, and it decides the GST rate. In SimpleERP the HSN code sits on each product, prints on every invoice line and feeds the HSN summary.
An HSN code, from the Harmonised System of Nomenclature, is the number that classifies goods for GST and customs, such as 9403 for many kinds of furniture. The code decides the GST rate and is printed on each tax invoice line. How many digits you must show depends on your annual turnover: currently four for turnover up to ₹5 crore and six above it.
HSN code: a worked example
Lakshmi Steel Furnitures has a turnover well under ₹5 crore, so it shows four-digit HSN codes. Its products use the codes below; the rate column is an assumption for illustration. Rates change, so confirm the rate for your goods with your CA or the GST portal before you rely on it.
| Product | HSN | Rate assumed | Price |
|---|---|---|---|
| Steel rack 4 shelf | 9403 | 18% | ₹4,990 |
| Office chair mesh | 9401 | 18% | ₹6,450 |
| LED panel 2×2 | 9405 | 18% | ₹1,850 |
| Cable tray 3 m | 7308 | 18% | ₹1,480 |
How many HSN digits must my invoice show?
Businesses with aggregate turnover up to ₹5 crore in the previous year must show at least four digits on B2B invoices; above ₹5 crore, six digits on every invoice. More digits are always allowed. The same rule applies to the HSN table in GSTR-1, covered in HSN codes on invoices and GSTR-1 table 12.
FAQ
Questions, answered
What is the difference between an HSN code and a SAC code?
HSN codes classify goods and SAC codes classify services. Both decide the GST rate and both are reported in the same HSN summary of GSTR-1. A SAC code always starts with 99, which is how you can tell them apart at a glance.
Where do I find the right HSN code for my product?
Search the HSN directory on the GST portal or CBIC's tariff by product description, then confirm with your CA if the product could fall under more than one heading. A wrong code can mean a wrong rate, which is costly to fix later.
What happens if I use the wrong HSN code?
If the code carries the same rate, it is usually a reporting error you correct going forward. If it carries a different rate, you may have under or over charged tax, which needs credit or debit notes and possibly interest. Fix the product master first.
Do HSN codes change when GST rates change?
The codes themselves rarely change, but the rate attached to a code can. The 22 September 2025 rate changes moved many codes between slabs, so check each product's rate against the current notification after any change.
Related
Keep reading
SAC code
The code that classifies services for GST, as HSN codes do for goods.
Read moreHSN codes and table 12
How many HSN digits your invoices need, what changed in GSTR-1 table 12, and how the HSN summary is built from invoice lines.
Read moreGST billing
Tax invoices with CGST, SGST or IGST by place of supply, HSN on every line and a UPI QR on the print.
Read more
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