Uses and Benefits of HSN Codes for Goods and Service Tax in India
Many states in India currently have their own systems for differentiating goods for tax rate determination. therefore, with the coming Goods and Services Tax (GST) scheme, there’s a desire for more uniform classification – not just on the national level but internationally. so, the HSN for goods and SAC system for services. In this we’ll focus on HSN codes as they relate to GST.
What are HSN codes
the World Customs Organization (WCO) created the Harmonized Commodity Description and Coding System is a multipurpose international product nomenclature.
WCO has three-quarters of which are developing countries that are responsible for maintaining more than 98 percent of world trade. HSN standardizes the differentiation of merchandise under sections, chapters, headings, and subheadings. This projects in a six-digit code for a products(two digits each representing the chapter, heading, and subheading).
India, a member of WCO has been using HSN codes since 1986 to differentiate commodities for Customs and Central Excise. To make the codes more explicit, Customs and Central Excise added two more digits resulting in an eight-digit classification.
Who are they for?
In Goods and service regime the dealers will have to use two, four, or eight-digit HSN codes for their products , depending on their turnover the year prior.
Dealers with annual gain of less than Rs 1.5 crores will not need to go with HSN codes for their commodities, Between Rs 1.5 crores and Rs 5 crores have be required to use two-digit HSN codes for their products or services. For Rs 5 crores and above have be required to use four-digit HSN codes for their products For imports/exports, Eight digits HSN code has been compulsory, as GST has to be compatible with international standards and practices.
Conclusion
India’s move to GST come moves to an online taxation system and along with to HSN codes for differentiation of goods for taxation. It’s all developed to bring about single taxation and ease of doing business. HSN codes will now be used in filing returns, on invoices, etc., rather than written descriptions. Asimot POS provides the best GST software for a safe and secure invoicing for importing and exporting commodities.
