What is an HSN code?
An HSN code is the Harmonised System of Nomenclature number that classifies goods. On a GST invoice it tells the buyer and the return which heading was supplied, and the rate is the rate notified for that heading. A service uses an SAC code, not an HSN.
What does the code classify?
The system groups goods into chapters and headings so the same product is described the same way on a tax invoice, in GSTR-1, and in the customs tariff. India uses the headings in the customs tariff for GST as well. A trade name is not a substitute for the heading.
The rate that follows the heading is on the GST rates page. Two products with similar names can sit in different headings.
How many digits appear on an invoice?
The count follows turnover in the preceding financial year. Four digits on a B2B invoice when that turnover is up to ₹5 crore, and six digits on every invoice when it is above ₹5 crore. The older two-digit step is not the current limit. The full rule is on the HSN digit page.
Four, or six. Up to ₹5 crore, four digits on a B2B invoice. Above ₹5 crore, six digits on every invoice.
What is an SAC code?
SAC means Services Accounting Code. It classifies a service the way an HSN classifies goods. A restaurant, a works contract, and a professional service are classified by the SAC, not by the HSN of the materials used. The same turnover bands decide how many digits are printed.
Where is the code looked up?
The GST portal publishes an HSN and SAC search. The description on the tax invoice has to match the heading that is chosen. An export declaration may need the eight-digit tariff item even when the domestic invoice stops at six.
Frequently asked questions
Four questions cover the rate, services, two digits, and customs.
Is the HSN code itself a tax rate?
No. The code classifies the goods. The rate is the one the rate notification gives to that heading.
Do services use an HSN code?
A service uses a Services Accounting Code. The digit count follows the same turnover bands as the HSN on goods.
Is a two-digit code the current rule?
No. Up to ₹5 crore of turnover in the preceding year, a B2B invoice shows four digits. Above ₹5 crore, every invoice shows six.
Are customs and GST codes the same heading?
The six-digit heading is the harmonised system used for both. Customs tariff items often run to eight digits. Eight digits are not the general rule for a domestic GST invoice.
Sources
The code is the harmonised system used in the customs tariff and on GST invoices. The digit count is on the HSN limit page.