What is the HSN Code Database ?
The HSN code database refers to a structured system or repository that stores information about the Harmonized System of Nomenclature (HSN) codes. These codes are used internationally to classify goods in a standardized manner for trade and taxation purposes. The HSN system was developed by the World Customs Organization (WCO) and has been adopted by over 200 countries, including India, for systematic classification of goods in imports and exports.
Purpose of the HSN Code
The primary goal of HSN codes is to make international trade more efficient by providing a universal classification of goods. Each HSN code consists of a set of numbers (usually 4, 6, or 8 digits), where each set of digits represents a specific category, sub-category, or product type. For example, a 4-digit code may represent a broad category, while a 6- or 8-digit code provides more specific detail.
Structure of HSN Code
The structure of HSN codes is as follows:
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First 2 digits: Chapter (broad category)
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Next 2 digits: Heading (subcategory)
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Next 2 digits: Subheading (more specific category)
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Last 2 digits (optional): Additional details used by specific countries
For example, the HSN code 1006.30.10 refers to a specific type of rice. The structure helps businesses, governments, and customs authorities classify goods in a consistent way.
Importance in India
In India, HSN codes are crucial under the Goods and Services Tax (GST) system. The Indian government mandates businesses to use HSN codes while generating invoices, filing GST returns, and while trading across borders. The number of digits required depends on the business’s turnover:
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Businesses with turnover below ₹5 crore: 4-digit HSN code
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Turnover above ₹5 crore: 6-digit HSN code
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Exports and imports: 8-digit HSN code
What is an HSN Code Database?
The HSN code database is a centralized digital resource that includes a comprehensive list of HSN codes along with:
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Product descriptions
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Applicable GST rates
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Unit of measurement
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Exemptions or special conditions (if any)
Conclusion
The HSN code database is an essential tool in today’s global trade and tax administration. It ensures accuracy, transparency, and compliance in classification and taxation of goods. By referring to the HSN database, businesses can avoid errors in GST filings, reduce penalties, and enhance their operational efficiency.
