What is HSN code?
Reviewed by CA Apurav GargLast reviewed
In short
An HSN code is the number that classifies a product under the international Harmonized System, used in India's customs tariff and GST rate schedules. It decides the GST rate and customs duty, and is shown on invoices and returns.
What it is
The Harmonized System is an international product classification run by the World Customs Organization. Goods are grouped into chapters (2 digits), headings (4 digits) and sub-headings (6 digits). India adds two more digits for its Customs Tariff, making 8-digit tariff codes. GST rate schedules for goods use the same codes.
Services have their own codes, called SAC (services accounting codes), used in the same way under GST.
Why it matters
- It decides the tax. GST rates and customs duties are set by classification. Two products that look similar can sit under different headings with different rates.
- It must be on invoices. Tax invoices must show the HSN code. The number of digits required depends on your aggregate turnover in the previous year, and on whether the buyer is registered. The limits are set by notification and can change, so check the current one.
- It must be in returns. GSTR-1 includes an HSN-wise summary of supplies, now split between supplies to registered and unregistered buyers.
- Imports and exports use the full 8-digit tariff code on the bill of entry or shipping bill.
How products are classified
Classification follows the General Rules for the Interpretation of the tariff, the section and chapter notes, and the wording of the headings, in that order. In short:
- Find the heading whose wording and notes best describe the product.
- A product's material, function and how it is presented matter more than its marketing name.
- Sets and kits are classified by the item that gives them their essential character, if they meet the rules for a set.
When classification is genuinely unclear, a business can apply for an advance ruling.
Common mistakes
- Copying the HSN code from a competitor's listing or the marketplace's suggestion without checking it.
- Using one code for a whole range when variants differ in material or use.
- Listing a product on a marketplace under a different HSN code from the one on your invoices.
- Not reviewing codes and rates after a GST rate change. Rates changed widely from 22 September 2025.
A wrong code can mean tax paid at the wrong rate, with interest and penalties on any shortfall, or credit and refund claims that fail. Record the reason for each product's code.
Example in rupees
A personal-care brand sells three products. Each has an eight-digit tariff code in the Customs Tariff, which starts with its four-digit heading:
| Product | Heading (first 4 digits) | What it covers |
|---|---|---|
| Shampoo | 3305 | Preparations for use on the hair |
| Face wash | 3304 or 3401 | Depends on its composition and how it is presented |
| Gift box of both | Depends | Classified by the item that gives the set its essential character, if it meets the rules for a set |
Its tax invoices show the HSN code to the number of digits required for its turnover, and its GSTR-1 HSN summary reports each code with quantity, taxable value and tax.
The face wash is the hard one. Its classification, and so its GST rate, depends on what it is made of, so the brand writes down the reasons for the heading it uses and keeps the product's ingredient list with them. The figures are illustrative.
Legal reference: Customs Tariff Act, 1975: First Schedule; CGST Act, 2017: section 31 and CGST Rules, 2017: rule 46; Notification 78/2020-Central Tax
Related terms
Work it out for your business
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General information only, not professional advice. Rules and rates change — check the official source before you act.