Rakesh runs a spice export business in Kochi. His accountant spots a problem: the same product appears under two different HSN codes across different invoices.
The mismatch affects invoicing, GST reporting, and export documentation.
An HSN code search identifies what you are selling; the applicable GST rate should then be checked against the current rate schedule and relevant conditions.
The mismatch affects invoicing, GST reporting, and export documentation.
An HSN code search identifies what you are selling; the applicable GST rate should then be checked against the current rate schedule and relevant conditions.
TL;DR
- HSN codes classify goods, while SAC codes classify services under GST.
- You can search HSN codes on the GST Portal using Services → User Services → Search HSN Code, available pre-login and post-login.
- For GST invoices and GSTR-1, minimum HSN/SAC digits depend on preceding-year turnover: generally 4 digits up to ₹5 crore and 6 digits above ₹5 crore.
- Goods exporters also use the 8-digit ITC(HS) tariff classification for customs and shipping-bill purposes.
What is an HSN code?
HSN stands for Harmonised System of Nomenclature. Under GST, it is used to classify goods so businesses can report them consistently for tax purposes.
India builds on the international six-digit Harmonized System and extends it to 8-digit tariff items for customs. Services use SAC, or Service Accounting Code.
How is an HSN code structured?
Take the 8-digit code 04022910, used for whole milk in the Indian tariff.
| Level | Code | What it represents |
|---|---|---|
| Chapter | 04 | Broad product family |
| Heading | 0402 | Product group within the chapter |
| Subheading | 040229 | More specific international classification |
| Tariff item | 04022910 | India's 8-digit product classification |
The code becomes more specific as digits are added. Product composition, form, use, and chapter notes can affect classification.
Why does the correct HSN code matter?
A wrong classification can affect GST rates, invoices, GSTR-1, e-invoices, e-way bills, customs documents, refunds, and tax exposure.
For recurring products, maintain an internal classification master.
How to search an HSN code on the GST Portal
The GST Portal provides a Search HSN Code tool that is available both before and after login.
Step 1: Open Search HSN Code
Use:
GST Portal → Services → User Services → Search HSN Code
Step 2: Search by HSN or description
Search using an HSN code or a trade/common description such as “cardamom” or “cotton yarn”.
Step 3: Read the full description
Compare your product → technical description → related HSN codes → chapter/subheading context. The tool can show related 6-digit and 8-digit codes.
Step 4: Verify the GST rate separately
The HSN search tool helps identify the classification. For the current GST rate, verify the code against CBIC's GST goods/services rate schedule and the applicable notifications.
How many HSN digits do you need to report?
For GST tax invoices, Notification No. 78/2020-Central Tax sets minimum HSN/SAC reporting based on aggregate turnover in the preceding financial year.
| Preceding-year aggregate turnover | General invoice requirement |
|---|---|
| Up to ₹5 crore | 4-digit HSN/SAC for B2B invoices |
| Above ₹5 crore | 6-digit HSN/SAC |
What about GSTR-1?
GSTN's current Phase 3 implementation for Table 12 of GSTR-1/GSTR-1A also uses:
- 4-digit HSN/SAC for taxpayers with AATO up to ₹5 crore
- 6-digit HSN/SAC for taxpayers above ₹5 crore
Which GST rate applies to an HSN code?
From 22 September 2025, India's GST structure moved primarily to:
- 5% merit rate
- 18% standard rate
- 40% special rate for selected demerit/luxury categories
Nil-rated and exempt supplies, specific rates, and exceptions still exist, so do not rely on the broad slabs alone.
Use this sequence:
Find correct HSN → read exact product description → check current CBIC rate entry → check conditions/exemptions → apply the rate
What changes for exporters?
There are two separate issues: GST reporting and customs classification.
GST invoice reporting
The minimum HSN digits required on the GST invoice continue to follow the applicable turnover-based rules.
Customs and shipping documentation
Goods exporters work with India's 8-digit ITC(HS) tariff classification for customs and shipping-bill purposes.
GST treatment of exports
Exports are zero-rated supplies under GST.
Exporters may use LUT/bond without payment of IGST or another permitted tax/refund route. Zero-rating does not make classification irrelevant; codes still need to align across invoices and customs records.
After classification, the payment still has to reconcile
Correct HSN classification closes the tax side of the invoice. The exporter still needs to collect and match the overseas payment.
PayGlocal supports Multi-Currency Accounts, 130+ global currencies across 180+ countries, INR settlement, payment tracking, automated FIRA, and EDPMS/e-BRC support for applicable exporter flows.
