HSN code stands for Harmonized System of Nomenclature code. It is a standardized system of names and numbers used to classify goods for customs and trade purposes. It is also known as a Harmonized Commodity Description and Coding System (HS).
The HSN code is an internationally recognized system that is used by over 200 countries, including India, to classify goods and products for customs and trade purposes. It is developed and maintained by the World Customs Organization (WCO) and is updated every 5 years.
The HSN code system consists of 21 sections, 96 chapters, and over 5,000 headings and subheadings. Each code is made up of 8 digits, with the first two digits representing the section, the next two representing the chapter, and the remaining four representing the specific product or commodity.
The HSN code is used to identify goods and products for customs clearance, tariff assessment, and trade statistics. It also facilitates the collection of accurate trade statistics and helps to prevent fraud and smuggling.
In India, the Central Board of Indirect Taxes and Customs (CBIC) is responsible for the implementation and administration of the HSN code system. Businesses and individuals that import or export goods or products are required to use the HSN code system to classify their goods and products for customs and trade purposes.
It is important to note that businesses are required to mention the HSN code while filing GST returns, otherwise they may face penalties. Additionally, it is crucial for the businesses to use accurate HSN code to avoid any discrepancies and legal issues.