Question 1

What is an HSN code?

Accepted Answer

HSN (Harmonized System of Nomenclature) is an internationally standardized system developed by the World Customs Organization (WCO) to classify traded products. Under Indian GST, businesses must report HSN codes on invoices based on their annual turnover slab.

Question 2

How many digits of HSN code are mandatory under GST?

Accepted Answer

Up to ₹1.5 crore turnover: HSN is not mandatory. ₹1.5–5 crore: 4-digit HSN required. Above ₹5 crore: 6-digit HSN required on all invoices.

Question 3

What is the difference between HSN and SAC codes?

Accepted Answer

HSN (Harmonized System of Nomenclature) codes classify goods and products, while SAC (Services Accounting Codes) classify services. Both are used to determine the applicable GST rate.

Question 4

What are the GST rate slabs in India?

Accepted Answer

Under GST 2.0 (effective 22 September 2025), the primary rate slabs are 5%, 18%, and 28%. A new 40% slab applies to luxury/sin goods (tobacco, aerated beverages). Some construction materials like fly ash bricks retain 12%. Essential items are Nil-rated (0%), and gold is taxed at 3%.

Question 5

What is the penalty for using the wrong HSN code?

Accepted Answer

Using an incorrect HSN code can lead to incorrect GST rate application and penalties under Section 122 of the CGST Act, including fines of ₹10,000 or the tax amount involved, whichever is greater.

Question 6

How do I find the correct HSN code for my product?

Accepted Answer

You can search by product name, brand, or code number using this free HSN lookup tool. The database covers 7,226 codes with GST rates, CESS, and Customs alignment from official CBIC & GSTN sources.