Understand HSN codes for goods and SAC codes for services under GST. Learn the digit requirements, how to find the right code, and compliance rules.
HSN (Harmonized System of Nomenclature) is an internationally standardized system of names and numbers to classify traded goods. Developed by the World Customs Organization (WCO), HSN codes are used by more than 200 countries. In India, HSN codes are mandatory on GST invoices to classify goods and determine the applicable GST rate.
SAC (Services Accounting Code) is the Indian equivalent of HSN for services. While HSN classifies goods, SAC classifies services. SAC codes are unique to India's GST system and are used to identify the type of service being provided and the applicable GST rate.
Together, HSN and SAC codes ensure that every product and service in India is classified correctly for GST purposes. Using the wrong code can result in incorrect tax rates, ITC mismatches, and potential penalties during GST audits.
HSN codes follow a hierarchical structure with increasing levels of specificity:
| Level | Digits | Description | Example (Rice) |
|---|---|---|---|
| Chapter | 2 digits | Broad category of goods | 10 — Cereals |
| Heading | 4 digits | Sub-category within chapter | 1006 — Rice |
| Sub-heading | 6 digits | Specific product type | 1006.30 — Semi-milled or wholly milled rice |
| Tariff item | 8 digits | Most specific classification | 1006.30.10 — Basmati rice |
The first 2 digits identify the chapter (e.g., Chapter 10 = Cereals). Adding 2 more digits narrows it to a heading (e.g., 1006 = Rice). The 6-digit sub-heading specifies the product type, and the 8-digit tariff item is the most specific classification used for customs and detailed GST classification.
The number of HSN/SAC digits required on your GST invoices depends on your aggregate annual turnover:
| Turnover Bracket | HSN/SAC Digits Required | Where Required |
|---|---|---|
| Up to Rs 1.5 Crore | Not mandatory (but recommended) | Composition dealers can skip HSN on invoices |
| Rs 1.5 Crore to Rs 5 Crore | 4-digit HSN/SAC | On all invoices + GSTR-1 |
| Above Rs 5 Crore | 6-digit HSN/SAC | On all invoices + GSTR-1 + e-invoices |
| Exports | 8-digit HSN | On all export invoices and shipping bills |
In GSTR-1: All taxpayers (regardless of turnover) must report HSN-wise summary of outward supplies in Table 12 of GSTR-1. The number of digits follows the same turnover-based rules. From January 2024, the HSN summary in GSTR-1 has been made more granular with mandatory rate-wise reporting.
Penalty for wrong HSN: Using an incorrect HSN code can lead to wrong GST rate application, ITC mismatch with the buyer, and potential demand notices during assessment. While there is no specific penalty for wrong HSN per se, the resulting tax short-payment attracts interest (18% p.a.) and penalties under Section 73/74.
Finding the correct HSN code is essential for GST compliance. Here are the most reliable methods:
The Central Board of Indirect Taxes and Customs (CBIC) maintains the official GST rate schedule. Search for your product in the rate notifications on cbic.gov.in.
Industry associations often publish product-specific HSN code lists for their members. For example, textile associations publish detailed HSN codes for different fabric types.
| Product | HSN Code | GST Rate |
|---|---|---|
| Rice (pre-packaged) | 1006 | 5% |
| Mobile Phones | 8517 | 18% |
| Cement | 2523 | 28% |
| Cotton Garments (below Rs 1000) | 6109 | 5% |
| Laptops | 8471 | 18% |
| Gold Jewellery | 7113 | 3% |
| Electric Vehicles | 8703 | 5% |
| Restaurant Services | 9963 | 5% |
Services Accounting Codes (SAC) follow a similar structure to HSN but are specific to services. All SAC codes start with 99 (indicating services). Common SAC codes used in India:
| Service | SAC Code | GST Rate |
|---|---|---|
| IT/Software Development | 998314 | 18% |
| Management Consulting | 998311 | 18% |
| Legal Services | 998211 | 18% |
| CA/Audit Services | 998221 | 18% |
| Cab/Taxi Services | 996411 | 5% |
| Hotel Accommodation | 996311 | 12% / 18% |
| Restaurant Services | 996331 | 5% |
| Courier Services | 996812 | 18% |
| Insurance Services | 997131 | 18% |
| Telecom Services | 998412 | 18% |
| Construction Services | 995411 | 12% / 18% |
| Security Services | 998529 | 18% |
Unlike HSN codes which are internationally standardized, SAC codes are unique to India. They are derived from the United Nations Central Product Classification (UNCPC) but adapted for Indian GST requirements.
Every taxpayer must provide an HSN-wise summary of outward supplies in Table 12 of GSTR-1. This table requires:
Rate-wise reporting (from Jan 2024): GSTR-1 now requires HSN summary to be reported rate-wise. If you sell products under the same HSN at different rates (e.g., due to GST slab changes mid-year), you must report them as separate line items.
Validation: The GST portal validates HSN codes entered in GSTR-1 against the master HSN database. Invalid codes will be rejected, preventing GSTR-1 filing until corrected.
Use our free GST calculator to add or remove GST for all slabs — 3%, 5%, 12%, 18%, 28%.
Open GST Calculator →It depends on your turnover: Businesses with turnover up to Rs 1.5 Crore (composition dealers) are not required to mention HSN codes. Turnover between Rs 1.5 Crore and Rs 5 Crore must use 4-digit HSN codes. Turnover above Rs 5 Crore must use 6-digit HSN codes. Exports always require 8-digit HSN codes on invoices and shipping bills.
HSN (Harmonized System of Nomenclature) codes classify goods/products and are internationally standardized. SAC (Services Accounting Code) codes classify services and are specific to India. HSN codes are typically 4-8 digits and apply to physical products. SAC codes always start with 99 and apply to services. Both determine the applicable GST rate.
You can search HSN/SAC codes on the GST Portal (gst.gov.in > Services > User Services > Search HSN/SAC), the CBIC website (cbic.gov.in) for official rate schedules, or through GST-compliant accounting software like Tally, ClearTax, or Zoho which have built-in HSN code databases with search functionality.
Using an incorrect HSN code can lead to applying the wrong GST rate, which may result in short-payment of tax (attracting 18% interest and penalties) or over-payment. It can also cause ITC mismatch for the buyer, as the HSN in your GSTR-1 will not match their purchase records. During audits, wrong HSN codes attract scrutiny and potential demand notices.
No, composition dealers with turnover up to Rs 1.5 Crore are not required to mention HSN codes on their Bill of Supply. However, mentioning HSN codes is recommended as it helps in product classification and avoids confusion if the dealer later transitions to regular GST registration.