What is GST code, HSN code and SAC codes in India?

What is GST code, HSN code and SAC codes in India? GST codes

To know what the GST codes, HSN code and SAC codes, let us first learn what is GST.

GST is a newly passed bill which calls for a common tax over the nation and just one single type of tax filtering ll the extra and indirect taxes.  It will replace VAT, service tax and excise in every business that will have to mandatorily register under it. The cost of tax on all commodities is expected to go down after the implementation of GST this is because GST eliminates tax on tax and provides tax credit adjustment without breaking credit chain. For example currently when a manufacturer sells to a trader he charges him excise, when the trader sells again he charges VAT but cannot adjust the excise credit against it. This causes the excise paid by him to be added to his cost. But, after GST manufacturer sells to trader and charges him GST. When the trader sells again he charges GST and avails input tax credit thereby, eliminating the taxes paid becoming a cost.

How do you move from VAT to GST?

  • All the dealers registered with VAT authorities and valid pan will be auto migrated along with provisional certificate in GGT registration form 21.
  • Within 6 months the dealers are to submitted the GST registration form 20 along with information required
  • If all the data provided are not accepted the provisional form provided will be cancelled by registration form 22

What is the procedure to move from service tax to GST

  • All the dealers registered with service tax authorities and having a valid pan number will be automatically moved to GST with provisional certificate for it in GST registration form 21.
  • Within six months the dealers are supposed to submit the registration GST form in the GST portal along with required information.
  • Once all the data and information provided is accepted you will be provided with a final GST registration certificate in registration form 6.
  • In case the information is not satisfactory a notice in form 23 will be issued and a hearing will be taken before cancelling or providing the final certificate.
  • If a hearing is not successful or the details are not provided within the given amount of time the certificate will be cancelled under form 22.

How to move from excise to GST?

  • All the dealers registered with excise authorities and having a valid pan number will be automatically moved to GST with provisional certificate for it in GST registration form 21.
  • Within six months the dealers are supposed to submit the registration GST form in the GST portal along with required information.
  • Once all the data and information provided is accepted you will be provided with a final GST registration certificate in registration form 6.
  • In case the information is not satisfactory a notice in form 23 will be issued and a hearing will be taken before cancelling or providing the final certificate.
  • If a hearing is not successful or the details are not provided within the given amount of time the certificate will be cancelled under form 22.

GST code (GST identification number)

  • Every tax payer will be assigned a state-wise PAN based GST tax payer identification number (GSTIN) which will be 15 digit long.
  • The first two digits of GSTIN will represent the state code according to Indian Census of 2011. Each state has a unique two digit code
  • The next 10 digit of GSTIN will be the pan number of the tax payer

(The GST code will be an alpha numeric number i.e first 1-9 and then A-Z it will be allotted on the basis of number of registrations a legal organization, company, etc has within one state. )

  • Thefourteenth digit currently has no use and therefore will be Z by default.
  • The last digit will be a check code which will be used for detection of errors.

Click here to Download List of HSN Code and SAC Code

HSN codes for GST in India

All the states in the country have their own tax system for classifying the goods tax rate. But with GST regime there will be an uniformity all over the state which will harmonize the system of HSN for the goods and the service accounting code or SAC system for the services.

In order to know about the GST code let us first discuss the HSN code as it is closely related to GST.

HSN (harmonized commodity description)

It is a multipurpose product that is for international purpose as well to develop world customs organization better known as WCO. WCO has 181 members and three quarters of it are developing countries. The developing countries are responsible for managing more than 98 percent of world trade. HSN standardize the classification of merchandise under section, chapters, headings which results in six code for each commodity. Every two digits in the code represents the chapter, heading and subheading.

India has been a member of WCO since the year 1971 and has been using HSN codes since 1986 to classify the commodities for the customs and central excise. The customs and central excise then added two more codes to make the codes more differentiable which gave 8 digit classification.

With GST taking control most of the business owners will have to take up two to four or eight digits HSN codes for their goods and services depending on their turnover for a year.

  • Dealers who have a turnover of Rs 1.5 crores up to 5 crores will have to use two digit HSN code.
  • Dealers with turnover less than 1.5crores will not have to use it.
  • The dealers who crosses the 5 crores margin will have to use 4 digit HSN codes.
  • In case of business that deals with import and export they will have to use 8 digit code which will be compulsory.

How is HSN code classified?

It has 21 sections with 99 chapters, 1,244 headings and 5,224 subheadings. They are arranged based on the product degree od manufacture or in terms of its technological complexity. The natural products that include plants and animals comes under the beginning of the section. While the man made or technologically advanced products that include machinery comes later.

Every section is a collection of various chapters. The sections represent broader classification of the goods and chapters that represent a smaller section that comes down to particular product section. Section XV relates to base metals and articles of base metals while section XV’s chapter 72 deals with iron and steel specifically.

Every chapter is divided into many headings which depends upon the type of goods that belong to the same niche. For example a chapter with heading 2 that deals with metal alloys will also have a chapter say 24 which will deal with metallic wires made from alloys.

Now coming down from the chapter is the heading which contains products that are unlimitedly assigned an HSN code. The ferro manganese under ferro alloys for example bears the HSN code 72.02.01-01 begins the product code in heading 02 under chapter 72. The HSN code for other chapter products under ferro alloys in 72.02.99.

In order to identify the goods better India and some of the countries use this 8 digit code for easier and more number of classification. Some of the HSN codes uses dashes in the beginning of description which denotes an article that belongs to a group covered under a heading. A double dash indicates that the article is sub-classification of the preceding article that has a single dash. And triple dash indicates that the article is a sub classification of the preceding article that has a double dash or triple dash.

Classifying goods under HSN

In formatting a classification for a particular item, dealers must apply the general interpretative rules. Once a classification is complete, there’s no requirement of applying the remaining rules. Moving on to the next rule is only necessary if a complete classification does not result from applying the previous rule. Classification is final once there is no doubt.

For the classification purposes a word should be built in its popular sense and not in the strict or technical words.

SAC code in GST (GST codes)

SAC and HSN are the similar codes under GST. In case of services, for each type of service provided is given an unified code for recognition, measurement and taxation. These are known as SAC codes. In the current service tax regime, SAC codes are already defined for each type of service.

When it comes to being under GST the majority of the dealers will need to adopt two- four or eight digit HSN codes for their commodities, depending on their turnover the previous year.

  • Business with turnover less than 1.5 crores will not require SAC codes for their goods and commodities.
  • Businesses with turnover between Rs. 1.5 crores and Rs 5 crores shall be required to use two digit SAC codes for their commodities.
  • Business that have a turnover of 5 crores and above will require to use 4 digit SAC codes.
  • In case of imports and exports the SAC codes will be 8digits.
  • The small dealers under composition scheme will not require to mention SAC codes in their invoices. The codes will be mentioned in invoice and in the GST tax return details which will be uploaded on the GST portal.
  • The small business under composition scheme will not be required to mention SAC codes in their invoice.
  • At the time of registration, migration the business taxpayer will be required to mention HSN codes of the goods he deals with during registration
  • Services will be classified as per the services accounting code SAC there service accounting codes issued by the govt. for service tax. This is expected to remain stable in GST regime.

With the coming of GST rule every business will have to be GST ready as per the rule provided and with that comes a necessity of GST ready software. An accounting software manages all your accounts and business details but it has to be upgraded to GST ready software so it can work accordingly without old tax rules. Reach accounting software is a  cloud based GST ready software that manages all your business requirements and is one of the most intelligent software that uses next generation programming skill. It is easily customizable and is user friendly yet it is a powerful and feature rich software that also easily integrates to ensure smooth business process.

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I’m a tax expert with over 10 years of professional experience. I’ve gained practical insights on GST and other Taxes during my tenture as a Tax expert and GST Trainer in Reach Accountant.
32 Comments
  1. Krishnan 5 months ago

    What is the HSN code for Automotive Chains used in Two Wheelers

  2. Rajagopal 5 months ago

    How to making inv forexisting stock send gst payable formula like
    Vat=output tax less inputtax

  3. metalcookware 4 months ago

    HSN CODE FOR HARD ANODISED TAWA

  4. Pradeep Kumar Bishnoi 4 months ago

    What’s the HSN code for electroplating job work.

  5. Jayant kumar agarwal 4 months ago

    Hsn codes for furniture market.

  6. rajashree kamble 4 months ago

    HSN code for Piston guide component used in break assembly of motor car.

  7. krishna 4 months ago

    i started business september 2016.till today i done business taxable 2lac only . i can invoice directly to customer with out hsn codes

  8. ANAND SULTANIA 4 months ago

    What is the HSN code for IDLER

  9. ANAND SULTANIA 4 months ago

    hsn code list in excel sheet

  10. David Panchal 4 months ago

    What means Code of 73269060

  11. RAM CHANDER 4 months ago

    HSN CODE SHOULD BE ACCODING TAX LIKE THIS
    TAX 5% HSN CODE-112233
    TAX 12% HSN CODE-114466
    TAX 18% HSN CODE-116688
    TAX 28% HSN CODE-118822
    FOUR TYPE TAX AND FOUR TYPE HSN CODE

  12. siva 4 months ago

    What is SAC Code for Advertising?

  13. jAYARAM 3 months ago

    FROM WHEN ONWRADS TEXTILES HSN code will be implanted IN PRICE TICKETS ?

  14. Satheesan 3 months ago

    What are the SAC codes for (1) Training on safety given to airport employees on a personal level or as an organization (2) Airport audit by an individual expert or an organization (3) conducting a conference/workshop on aviation safety by an individual or an organization

  15. Rajib 3 months ago

    What will be the HSN CODE OR SAC CODE for my proprietorship Co. doing business as a distributor of an online school management software (ERP) with the Software manufacturing Co? Plz Help.

  16. Sanjeev Powar 3 months ago

    What is the HSN code for Magnet Measuring Equipments like Gaussmeter,Fluxmeter etc.

  17. Jigar fiber glass 3 months ago

    What is the hsn codes for frp products for frp motor guards,frp sheet , frp lining work, frp pipe,,,,

  18. bonny mondal 3 months ago

    for registering gst i need to know the code for computer business. i am a retailer selling computer & laptops

  19. Kailash 3 months ago

    We r dealing in Motor parts and accessories
    Kindly provide us HSN CODES and GST rate

  20. Vinod Virmani 3 months ago

    I m a AC restaurant owner having TO less than Rs75lacs. Should I get GST no. If yes how much I should recover GST from my customer. What are my liability towards GST regime.

  21. Syed 3 months ago

    Iam Working in Advertising agency for pan India my vendor available pan India, but my few vendors charging as per Hsn Code for material serving and some vendor are charging through sac code for same material + Tax also double. Iam not have the clarity which one have to approved.

  22. Ashwani 3 months ago

    What is hcn code for metallic die and fixture

  23. Amal 3 months ago

    What is the hand made chapathi not branded hns code?

  24. C R Patel 2 months ago

    WHICH HSN CODE APPLY TO CONSTRUCTION WATER SUPPLY TO BUILDER

  25. vikas lahuram ghule 2 months ago

    We are in the field of advertising and taking the contrac of wall/shop painting , Flex boards(shop boards) etc.
    What is the Hsn code and Sac coed for the same

  26. Kamlesh sharma 2 months ago

    Please give sac code of oil filtration works

  27. bhuvi 2 months ago

    if sac code starts from 99

  28. R. Shanmugavadivelan 2 months ago

    What is the GST Tax % and HSN code for New and old Jute Gunny sacks and Plastic sacks

  29. Kumar 2 months ago

    Sir below 1.5 cr turnover dealer maintained inventory is mandetary? Or not?

  30. Dhannaram Malinda 2 months ago

    सर “जी एस टी” में कोड कितने होते हैं ?
    ये सवाल मेरे एक्जाम में आया था
    प्लीज बताईये

  31. SESHAGIRI RAO 2 months ago

    PLEASE CLARIFY

    WHETHER FOR SAC NO WITH 8 DIGIT AND HSN 8 DIGIT HAS COME INTO FORCE RECENTLY / MODIFIED OR 6 DIGIT HSN NO IS OKAY

    MANY OF THEM HAVE GOT THIS DOUBT PL CLARIFY

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