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Amendments in HSN system

There are 233 amendments which were made in HSN codes which shall be followed by each country for the customs declaration for the exported or imported goods from 1/01/2017. 

These amendments includes:

• The Agricultural sector (85)

• The Chemical sector (45)

• The Wood sector (13)

• The textile sector (15)

• The base metal sector (6)

• The machinery sector (25)

• The transport sector (18)

• Other miscellaneous sectors (26)

Purpose of adopting HSN code in India

After the introduction of GST, enactment of HSN code in India is bringing the country at par with the other countries which has been following HSN for years. HSN code was adopted by India to make GST standardized and worldwide accepted. This has also minimized the cost that are related to international trade as it will bring harmonization in trade and customs procedures.The HSN will help every taxpayer in India to search the GST rate by just entering the HSN code after that the system will automatically show the tax rate applicable on the commodity under the GST, hence abridging and simplifying the trade related procedures in India. That is why it is mandatory to mention the correct HSN codes during theGST Return filing under GST. These are the reasons why India adopted HSN system.

Structure of HSN code

HSN code is a six-digit number for goods, 

this six-digit number consists of two number each for

• Chapter: Under HSN module there are 99 chapters.

• Heading: Under these chapters, there are 1244 headings.

• Subheading: There are 5224 subheadings under these headings.

• Regional Tariff*

• National Tariff*

The first six digits of HSN code cannot be altered as per the guidelines of WCO but last four digits which includes Regional tariff and National tariff can be changed by the customs authority. This HSN code helped the government to implement GST on goods and services seamlessly as HSN system was already adopted by India under Central Excise and Customs regime.

 Application of HSN code in India

There are certain criteria on which the HSN depends on. 

They are mentioned below:

• No HSN code is required to businesses whose turnover is less than 1.5 crore INR Any company whose turnover is more than 1.5 crore INR but less than 5 crores INR shall apply 2 digit HSN code.

• 4 digit HSN code is required in the case any business has a turnover of more than 5 crores INR.

• Any business who is into export and import, irrespective of turnover shall use 8 digit HSN code.