What is an HSN code?

HSN (Harmonised System of Nomenclature) is the international system for classifying goods, developed by the World Customs Organization and used in India for GST and customs. The code determines the tax rate.

How many digits

The number of digits required on an invoice depends on the supplier's aggregate turnover, and the thresholds have been revised over time — check the current CBIC notification rather than assuming. Broadly: smaller turnover requires fewer digits, larger turnover requires more, and exports require the full 8-digit code.

The structure is hierarchical: the first two digits are the chapter, the next two the heading, then subheading, then national detail. More digits mean a narrower category.

Why the code matters

The rate follows the classification. Two similar products in different headings can attract different GST rates, and the difference is the supplier's liability if the classification is wrong — with interest, and potentially penalty.

Classification disputes are among the most common GST litigation in India precisely because the boundaries between headings are not always obvious.

HSN vs SAC

HSN is for goods. SAC — Services Accounting Code — is for services. A business supplying both uses both.

What people get wrong

Copying a competitor's code. Their product may genuinely sit in a different heading, and "they used it too" is not a defence.

Using too few digits. Under-reporting digits below the required threshold is a compliance failure independent of whether the rate was right.

Never revisiting classification. Rates and notifications change.

On Bidancer

Product signals carry structured specifications including classification fields, so a buyer sees the tax-relevant details as part of the listing rather than discovering them at invoicing.