HSN Code: Definition, Meaning & Guide for Indian Businesses

HSN (Harmonized System of Nomenclature) is a 6-8 digit code used globally and in Indian GST to classify goods. SAC codes do the same for services.

What is HSN Code?

HSN stands for Harmonized System of Nomenclature. It is an international system developed by the World Customs Organization to classify physical goods using 6 to 8 digit numerical codes. India uses HSN for GST. Every product on a tax invoice must carry the correct HSN code. The number of digits required depends on your turnover: 4 digits for businesses with turnover up to ₹5 crore, 6 digits for businesses above ₹5 crore. Services use a parallel system called SAC (Services Accounting Code) which always starts with 99. Wrong HSN codes lead to wrong GST rates and audit issues, so always verify before billing.