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GST taxpayers will have to furnish HSN (Harmonised System of Nomenclature Code) in their invoices with effect from the 1st April, 2021.
- It is applicable to those businesses whose turnover is more than Rs 5 crore.
About
- In trade parlance, every product is categorised under an HSN code (Harmonised System of Nomenclature).
- The common HSN codes apply to Customs and GST, importers and exporters have been furnishing these codes in import/export documents.
Harmonized System of Nomenclature Code (HSN)
- It is a six-digit identification code. Of the six digits, the first two denote the HS Chapter, the next two give the HS heading, and the last two give the HS subheading.
- It helps in systematic classification of goods across the globe.
- It was developed by the World Customs Organization (WCO) and it came into effect from 1988.
- India has been a member of the WCO (World Customs Organization) since 1971.
- Also called the “universal economic language” for goods.
Image Courtesy: Tradeglobal
Importance of the HSN Code
- It helps in systematic classification of goods, it can also be used to gather data and solve problems that would otherwise be difficult to obtain.
- Over 200 countries use the system as a basis for their customs tariffs, gathering international trade statistics, making trade policies, and for monitoring goods.
- HSN numbers exist for each commodity in every country, and the number remains the same for almost all goods.
- The system helps in harmonising customs and trade procedures, thus reducing costs in international trade.
Source: LM
