01
What HSN classification does
HSN creates a standard way to describe categories of goods across invoices, returns and trade records. The code supports classification; it does not determine tax treatment without the relevant notification and facts of the supply.
Put this into practice with Understand GST invoicing.
02
How many digits are reported
GST guidance for Table 12 reporting states that taxpayers with annual aggregate turnover up to ₹5 crore report a minimum of four HSN digits, while taxpayers above ₹5 crore report a minimum of six. Current portal validations and notifications should be checked before filing.
Put this into practice with Calculate GST.
03
HSN code in GST: what appears on a tax invoice
Rule 46 of the CGST Rules sets how many digits of the HSN code (for goods) or SAC code (for services) a tax invoice must show, based on the supplier's aggregate turnover in the previous financial year. The table summarises the rule in force since 1 April 2021; check the current notification before relying on it.
| Aggregate turnover in the previous financial year | Digits on the tax invoice |
|---|---|
| Up to ₹5 crore | 4 digits on B2B tax invoices; optional on B2C invoices |
| More than ₹5 crore | 6 digits on all tax invoices |
| Services (any turnover) | SAC code at the same digit level, in place of HSN |
Put this into practice with Use a GST invoice format.
04
HSN and service classifications
HSN is used for goods. Services are classified using service accounting codes in GST contexts. The invoice should use the classification appropriate to what is actually supplied.
For the tax these codes classify supplies under, read what is GST.
05
How to choose and maintain a code
Start from the product’s material, function and specific tariff description. Keep the rationale documented, review changes and obtain professional advice when classification is uncertain or commercially material.
06
A classification record another reviewer can check
For example, a seller should not classify a stainless-steel kitchen item from its retail name alone. Record the product material, primary function, relevant tariff heading and why a more specific description does or does not apply. Keep the dated source with the product record, then carry the approved code into the invoice and return rather than reselecting it for each transaction.
- Product evidence: material and primary function
- Classification evidence: heading, notes and effective source
- Control: approved code retained with the product record
- Review trigger: product or official classification change
Primary sources
