The HSN is an abbreviated form of the Harmonized System Nomenclature which is an internationally standardized nomenclature of names and numbers that is applied in classifying goods and commodities. The HSN Code was designed and supported by the World Customs Organization (WCO), and it is utilized by businesses and customs administrations to define, identify, and categorize products in terms of international trade, taxation, and customs duties.

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HSN Code
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What is HSN Code?
The HSN is an abbreviated form of the Harmonized System Nomenclature which is an
internationally standardized nomenclature of names and numbers that is applied in classifying
goods and commodities. The HSN Code was designed and supported by the World Customs
Organization (WCO), and it is utilized by businesses and customs administrations to define,
identify, and categorize products in terms of international trade, taxation, and customs duties.
The HSN code is a hierarchical system, which enables the customs officers, businesses and
authorities to categorize goods based on their nature, material makeup and application.
Structure of HSN Code
The HSN code is a 6-digit numerical code that follows a specific structure:
• First Two Digits (HS-2): This is a representation of the product chapter. This is normally the
general category (e.g., machinery, chemicals, textiles, etc.).
• Next Two Digits (HS-4): The heading in the chapter, which describes even more specific
products.
• Last Two Digits (HS-6): The terms consist of the subheading that further specifies the product
classification, and thus, it is highly specific.

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For example, the HSN code for wheat flour may be:
• Chapter (11): Products of the milling industry, including flour.
• Heading (01): Wheat or meslin flour.
• Subheading (01): White wheat flour.
Thus, the HSN code for wheat flour could be 1101.
Importance of HSN Code
• International Trade: The HSN system offers a universal language in trade and hence allows easy
international transactions. Governments and businesses are able to monitor goods flow across borders
using the HSN code, which is effective.
• Customs and Taxation: Customs agencies utilize the HSN code to identify the amount of tariffs,
duties, and taxes on imported products. The system guarantees uniformity and transparency of
taxation policies.
• Ease of Trade Compliance: Businesses should also be conversant with the HSN codes in order to
make the right documents upon importation/ exportation of goods. This guarantees that there are no
sanctions due to a breach of rules.

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• GST Implementation: In some countries, such as India, the HSN code is used in classifying
goods in the tax regime of Goods and Services Tax (GST). Every product bears a certain
code of HSN that dictates its GST rate.
HSN Code and GST
In the Indian GST system, HSN code is important in the categorization of goods as far as tax
is concerned. There are varying tax rates on different goods, and the HSN code assists a
business in determining the appropriate GST that would be applied to their goods.
• GST HSN Code Structure:
1.There are 22 sections of the HSN codes, and these 22 sections are broken down into 98
chapters.
2.An example is that HSN Code 0901 refers to coffee and coffee substitutes, whereas HSN
Code 1006 refers to rice.
How to Find an HSN Code?
• Online Databases: Some government websites and resources (such as the CBIC portal in
India) provide businesses with a search on the appropriate HSN code of their products.

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• Manual References: A number of businesses use official HSN Code books or government-
published documentation, which entail long lists of products and their corresponding codes.
• Product Classification Guidelines: There are a number of websites that provide product
classification.
How HSN Codes are Used in Different Countries
• India: In India, the taxation system is the GST code where businesses are required to use
the HSN code in classifying taxes. India has an 8-digit product code system of GST.
• European Union: The EU applies the Combined Nomenclature (CN) which is in effect an
extension of the HSN system. It enables further product classification, as demanded by the
trade regulations of the European Union.
• United States: In the U.S., the system employed is the Harmonized Tariff Schedule (HTS)
that builds on the HSN system yet adds extra digits to give a more specific product
classification.
• China: China uses an HSN Code System that aligns with the global HSN standards but may
also have specific modifications and additional digits based on local regulations.

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HSN Code Example List
Here’s a brief list of some common HSN codes for popular products:
• HSN Code for Food Products:
1.1006 - Rice
2.1101 - Wheat or meslin flour
3.1701 - Cane or beet sugar
4.1806 - Chocolate and other food preparations containing cocoa
• HSN Code for Machinery:
1.8431 - Machinery for preparing or manufacturing food or drink
2.8501 - Electric motors and generators
3.8471 - Automatic data-processing machines
• HSN Code for Textiles:
1.6204 - Women’s or girls' suits, dresses, skirts
2.6109 - T-shirts, singlets, and other vests

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• HSN Code for Chemicals:
1.3003 - Medicaments (excluding veterinary medicaments)
2.3808 - Insecticides, fungicides, and similar products
• HSN Code for Electronics:
1.8528 - Reception apparatus for radio-telephony
2.8473 - Parts and accessories for office machines
HSN Code for Services (Under GST)
Although HSN codes are normally applied to physical goods, a similar system exists in some
countries to apply to services, called SAC (Services Accounting Code) under GST in India. The
purpose of this system is to code services like goods that are coded under HSN.
How to Use HSN Code Effectively in Business?
• Accurate Classification: You should make sure that you classify your products properly with the
HSN code. The wrong classification may result in wrong taxation or wrong customs, and this will
attract penalties.

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• GST Filing: In submitting GST returns, businesses are required to state the HSN code of
each product that is being sold or purchased. This is to make sure that your transactions
are charged the appropriate tax rates.
• Import and Export: When it is time to do international trade, you should use the HSN
code to be sure that your products are properly classified and have the correct customs
duties.
• Inventory Management: Give the products in your inventory system HSN codes to find it
easier to report, do accounting, and file tax returns.
• Stay Updated: The HSN codes are revisable periodically. Make sure the business is
abreast with any developments or changes in codes or taxation within your jurisdiction.
Conclusion
The HSN code system is a very crucial aspect in worldwide trade, taxation, and business.
Through the efficient classifications of goods and services, any business will be in a position
to be compliant, decrease tax errors, and streamline customs operations. The knowledge of
the complexity of HSN code is essential in international trade and management of finances
in a contemporary economy.