Harmonized System of Nomenclature(HSN)
What is Harmonized System of Nomenclature(HSN)?
HSN stands for Harmonized System of Nomenclature which was developed by the World Customs Organization (WCO) with the vision of classifying goods all over the World in a systematic manner. HSN contains six digit uniform code that classifies 5,000+ products and which is accepted worldwide.It came into effect in 1988 . These set of defined rules are used for taxation purposes in identifying the tax rate applicable to a product in a country.
What is the Meaning of HSN Code?
The above information describes about HSN codes and its classification as 2 digit HSN code, 4 digit HSN codes, 6 digit HSN codes and 8 digit HSN codes.
HSN standardizes the classification of merchandise under sections further rolled down into chapters, which are further classified into headings and subheadings. This results in a six-digit code for a commodity (two digits each representing the chapter, heading, and subheading). India, a member of WCO, has been using HSN codes since 1986 to classify commodities for Customs and Central Excise by adding two more digits to make it more precise, resulting in an eight-digit classification.
Under the new indirect tax regime which has engulfed a plethora of indirect taxes, the GST Council has classified goods and services into 5-tier rate structure (nil, 5%, 12%, 18%, 28%) based upon Harmonized System of Nomenclature (HSN) codes. Traders are not likely to face hardship in classifying the goods under the HSN as the goods emanate either from manufacture or from imports. Traders usually don’t change the nature of goods. The classification, in general, will be in continuity from the HSN declared by the manufacturer or importer both of whom have been using the system in the past also.
Why is HSN required?
- HSN reinforces international trade and commerce by providing a common understanding of the goods being traded irrespective of the national boundaries.
- The taxpayers are not required to submit a description of goods while filing the return as the same will be obtained from invoices which are made on the basis of HSN codes.
- A systematic and logical way of classification will reduce the chances of any misinterpretation
ALSO IN THIS CATEGORY
- Intermediate Goods in Trade Statistics
- HS, SITC and BEC conversion and correspondence tables
- Search SITC code description
- HS 2002 Classification by Section
- Non-Monetary Gold in Trade Classifications (SITC, HS)
- Commodity Indexes for the Standard International Trade Classification, Revision 3
- Tariff line product code description
- 5th revision of the Classification by Broad Economic Categories (BEC)
- Classification by Broad Economic Categories (Rev.4)
Realted meta Tag:
meta name=”title” content=”HSN stands for Harmonized System of Nomenclature “>