October 26, 2025 · 11 mins read
Santosh Kumar
Goods and Services Tax (GST) is the value-added tax levied on almost all goods sold for domestic consumption and services we use within the country. It is a single tax structure removing all the previous central and state taxes. GST is actually paid by the customers who avail the service or the goods they buy, but it is remitted to the government by business houses and companies. GST is the outcome after merging all the central taxes (Excise duty, sales tax, service tax, surcharges and cesses) and state taxes (State VAT/ sales tax, Purchase tax, Luxury tax, entertainment tax, sin tax, etc.) and making it into a single tax under the slogan "One Nation, One Tax".
GST is one of the biggest reforms in the taxation sector in India. GST helped in bringing uniformity in the taxation of various commodities and services used in India. It also contributed to eliminating the cascading effect of various taxes levied by the state and central government. Goods and Services Tax (GST) is a single taxation, but due to the vast number of commodities and services, they are placed under different GST slabs or different GST tax rates. The GST rates are fixed under 5 slabs,
NIL: Under this tax slab 0% tax is levied on the goods or services we use.
5 %: Under this tax slab 5% tax is levied on the goods and services we use.
12%: Under this tax slab, 12% tax is levied on the goods and services we use.
18%: Under this tax slab, 18% tax is levied on the goods and services we use
28%: Under this tax slab, 28% tax is levied on the goods and services we use.
NOTE: Gold and other precious metals like silver, platinum, etc., are not exempt but taxed at a concessional GST rate of 3% under specific HSN codes
To date, 34 GST council meetings have been held, and many goods have been shifted from one slab to another. Some of the tax rates are decreased from 28% to 18% and some of the goods tax rates are shifted to 5% from NIL.
HSN stands for "Harmonised System of Nomenclature", which was developed by the World Customs Organisation (WCO). WCO's main objective for introducing HSN codes is to classify all the goods in a systematic manner. It clears the confusion and helps in domestic and international trade between the countries. More than 20,000 goods are traded using HSN codes across the world between countries. More than 90% of world trade is done through the WCO using the revised HSN codes. India is also included in the community by accepting the HSN codes procedure.
In India, the HSN code consists of 8 digits, where the first two digits denote the chapter number, the next two indicate the heading number, the subsequent two digits specify the sub-heading, and the final two digits denote the details of the tariff item.
For years, other countries have been using HSN codes for trade. After the introduction of GST in our country, HSN and imports and exports standardised Codes as accepted in the global platform have been adopted.
The use of HSN codes minimises the cost and simplifies the customs procedure. The HSN codes help all taxpayers to know about GST rates against a particular product. It is mandatory to mention the HSN codes while filling the GSTR forms.
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The use of HSN codes is mainly for dealers and traders. They must adopt 2-digit, 4-digit, and 8-digit HSN codes depending upon the following criteria.
1: If the business turnover is less than Rs. 1.5 crores, then there is no need to adopt the HSN codes.
2: If the business turnover is between Rs. 1.5 Crs to Rs. 5 Crs, then they must adopt 2-digit HSN codes for the business trades.
3: If the business turnover is above Rs . 5 Crs, then they must adopt 4-digit HSN codes for the business.
4: In the case of Import and export dealings and international trades, one must adopt 8-digit HSN codes for the business trades.
Under the HSN module, the classification of the goods into different
1: 21 Sections
2: 99 chapters
3: 1244 headings
4: 5244 subheadings
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Covers almost all the goods which are in the trade.
Nylon Moulding Powder (HSN Code: 39 08 90 10)
1: The first two digits (39) indicate the chapter under HSN codes.
2: The next two digits (08) indicate the headings under chapters.
3: The next 2 digits (90) indicate the sub-headings, and the 6-digit HSN code is accepted worldwide.
4: The next 2 digits (10) sub-classify the product tariff heading during import and export of supplies.
The use of HSN codes allows you to save time and money during GST filing, as filling in the HSN codes allows automation in GSTR.
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India took up the HSN code system in 1986 in its customs and central excise duties and introduced its use further on with the GST regime. The Indian HSN standardised code is based on an 8-digit arrangement, permitting other finer categorisation of goods. The organisation of a precise code is shown below:
First 2 figures: This is referred to as the chapter number (specifies the general category of goods).
Next 2 characters: It is the heading (refers to a particular product group in the chapter).
Following 2 figures: Also called the subheading (provides additional classification).
Last 2 characters: This is the tariff item (offers detailed product identification specific to India).
The classification of goods under this hierarchical system is clear and standardised, and there are fewer chances that a businessman or tax authority will not be in a position to know the exact rate of GST to be met and paid.
To become GST compliant, it is important to know the right HSN code to use for your product. These are the key methods of finding the appropriate HSN code:
For those who might be wondering how to find HSN code on the GST portal, they must know that the official GST website offers a feature that allows users to directly search for HSN codes. To accomplish the task, =follow these instructions:
Step 1: Log in to your GST account.
Step 2: Go to ‘Services’ followed by ‘User Services’ and click on ‘Search HSN Code’. The user can initiate a search by entering at least the first 3 characters of the chapter code. Otherwise, you may also search by entering product descriptions.
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Various government and individual websites have published full-blown HSN lists. These lists present all the appropriate chapters, then headings and so on, which enables easier browsing and finding the applicable code of your goods.
In case it is a complex product or involves doubt, it will be ideal to consult a GST expert to address tax implications. Inappropriate classification can lead to fines or wrong tax deposits.
1: The HSN code under GST of six digits, forming a uniform code, helps in classifying over 5,000 products and is accepted worldwide.
2: The GST HSN helps in taxation purposes in identifying the HSN code-wise GST rate applicable to a product in a country.
3: The HSN code under GST is also used to determine the quantum of items traded or imported throughout the nation.
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HSN has been applicable in India after the implementation of GST. India has already been using the HSN system in the Central Excise and Customs regime.
But the GST HSN is a much more detailed classification that adds another two digits to the 6-digit structure. For certain categories of persons in GST, there is even a requirement to mention the HSN code with the GST rate in the tax invoices prepared by them.
Under the GST law, the HSN code to be used by a taxpayer for the classification of goods will be based on the taxpayer's turnover. The HSN code needs to be declared on the tax invoice and also reported while filing the GST returns.
The HSN codes for mandatory mapping/classification of goods that need to be used by a taxpayer are as follows;
1: Taxpayers whose turnover is Rs. 5 crore and above shall use 4 4-digit HSN codes.
2: Taxpayers whose turnover is above Rs. 1.5 crore, but below Rs. 5 crore shall use 2 2-digit HSN codes
3: Taxpayers whose turnover is below Rs. 1.5 crore is not required to mention the HSN code in their invoices
4: The draft list of HSN codes released and available in the public domain can be assessed on the government GST website.
5: Under the GST laws, the services will be classified as per the Services Accounting Code(s) (SAC)
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Small taxpayers with an annual turnover of up to Rs 1.50 crores in the preceding financial year need not be required to mention the HSN code-wise GST rate in their tax invoice.
Taxpayers having a turnover exceeding Rs. 1.5 crore, but up to 5.00 crore will be required to mention only two digits of GST HSN
All those taxpayers having a turnover exceeding Rs 5 Crore will be required to mention four digits of GST HSN.
Every business needs to understand how to add an HSN code to the GST portal, amidst the rapidly changing landscape of GST in India. When codes are entered accurately, it will not only lead to accurate filing but also avoid the pitfalls of misfiling, which leads to penalties.
Utilising online GST software and inventory management software like MargBooks will simplify the filing process for you and is less confusing than GST filing normally would be; the likelihood of errors is minimal with software as opposed to filing without it, and the software ensures compliance. By using this technology, you will save crucial time, have higher accuracy with taxes, and over time, you can redeploy your time to develop your company.
Any company at any stage, either a startup or an established one, will utilise the use of technology in their operation to solve and develop their tax processes, along with compliance for the GST filing, making it totally pain-free.
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HSN code stands for "Harmonised System of Nomenclature". This system has been introduced for the systematic classification of goods all over the world. HSN code is a 6-digit uniform code that classifies 5000-plus products, and it is accepted worldwide. It was developed by the World Customs Organisation (WCO) and came into effect in 1988.
It has about 5,000 commodity groups, each identified by a six-digit code, arranged in a legal and logical structure. It is supported by well-defined rules to achieve uniform classification.
The main purpose of HSN is to classify goods from all over the World in a systematic and logical manner. This brings in a uniform classification of goods and facilitates international trade.
It is a mandatory requirement under GST to mention the HSN/ SAC code in the GST invoice. HSN code is mandatory for all, except for those with a turnover less than 1.5 Cr in a financial year and a taxpayer who has done GST Registration under the composition scheme.
Every product has an HSN number. Visit the GST portal, click on "services" then "User Service" and then click on "HSN Code" and add the description of your goods to find your HSN Code.
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