India tax
https://cleartax.in/s/gst-sac-service-accounting-code
https://www.nssuccess.com/netsuite/how-to-add-gst-rules-for-new-product-in-
netsuite/
In India, the Harmonized System of Nomenclature (HSN) is used for the
classification of goods under the Goods and Services Tax (GST) system. The HSN
system is an internationally standardized system for the classification of
products, which is widely adopted across various countries to ensure uniformity and
consistency in trade.
What is HSN?
The Harmonized System (HS) is an international classification system for goods
developed by the World Customs Organization (WCO). In India, HSN Codes are used for
the classification of goods for taxation purposes under GST. The system assigns a
unique code to each product, which helps in identifying and categorizing goods for
tax purposes.
HSN Code Structure in India:
* HSN codes in India are 6 digits long. However, India uses a 8-digit code for more
detailed categorization under GST. The first 6 digits of the HSN code are aligned
with the international system, and the last 2 digits are used by India for further
classification.
* For example, the HSN code for pumps could be 8413 11 in the international system,
but in India, it might be extended to 8413 11 00 for detailed classification.
How the HSN Code Works:
The HSN system is organized into a hierarchical structure:
1. Chapter (2 digits): The broad category of goods.
2. Heading (4 digits): A more specific classification under the chapter.
3. Sub-heading (6 digits): Even more specific classification.
4. Tariff Item (8 digits): The most detailed level of classification used in India.
HSN Code and GST Rates:
The HSN code plays a key role in determining the GST rate for a product. Each HSN
code corresponds to a particular GST rate, ranging from 0% to 28%, based on the
classification and nature of the goods.
For example:
* HSN Code 8413 relates to pumps and compressors, and the GST rate on these items
could be 18%.
* HSN Code 8479 relates to machines and mechanical appliances, and may fall under
18% or 28% GST, depending on the specific machine.
HSN Code and GST Filing:
Businesses must mention the HSN code while filing GST returns. The HSN code helps
authorities to classify goods and determine the correct tax rate to apply.
* Small Businesses (Turnover < ?5 Crores): Small businesses are required to mention
only 2 digits of HSN in their GST returns.
* Larger Businesses (Turnover ? ?5 Crores): Businesses with a turnover of more than
?5 crore must mention the 4-digit HSN code in their GST returns.
* Exporters: Exporters must also use the HSN code to claim zero-rated GST on
exported goods.
HSN Code Examples and GST Rates in India:
Here are some examples of HSN codes and their associated GST rates:
* HSN Code 7407: Copper waste and scrap �V 18% GST
* HSN Code 8409: Parts suitable for use solely or principally with engines �V 28%
GST
* HSN Code 3923: Articles for the conveyance or packing of goods �V 18% GST
* HSN Code 1106: Flour of wheat �V 5% GST
* HSN Code 6309: Worn clothing and other worn articles �V 5% GST
GST Tax Rate Categories Based on HSN:
The GST tax rates on goods classified under HSN codes generally follow these
brackets:
* 0%: Exempted goods
* 5%: Lower tax rate (e.g., essential goods)
* 12%: Standard tax rate for a broad range of goods
* 18%: Standard tax rate for a majority of goods
* 28%: Highest tax rate for luxury and non-essential goods
Conclusion:
The HSN code plays a crucial role in the GST system by ensuring that goods are
classified correctly and taxed at the appropriate rates. It simplifies the tax
structure, facilitates smooth international trade, and helps businesses comply with
the GST regulations. If you are a manufacturer or seller in India, understanding
the HSN code for your products is essential for accurate GST filings and
compliance.
