Quick Answer: HSN (Harmonised System of Nomenclature) codes classify goods for GST. Businesses with turnover above ₹5 crore must use 6-digit HSN codes on invoices; ₹1.5–5 crore need 4-digit codes; below ₹1.5 crore need 4-digit codes for B2B invoices. SAC codes (Service Accounting Codes) classify services.
About HSN / SAC Codes Under GST
The Harmonized System of Nomenclature (HSN) is an internationally standardised system for classifying traded products. Under India's GST, every supply of goods must be classified under an HSN code, and every supply of services under an SAC (Services Accounting Code). These codes determine the applicable GST rate and must appear on tax invoices.
HSN Code Mandatory Requirements
| Annual Turnover | HSN Digits Required |
|---|---|
| Up to ₹1.5 crore | Not mandatory (optional) |
| ₹1.5 Cr to ₹5 Cr | 2-digit HSN mandatory |
| Above ₹5 Cr | 4-digit HSN mandatory |
| Exports / E-Way Bill | 8-digit HSN mandatory |
SAC Code Structure
SAC codes are 6-digit codes starting from Chapter 99. The first two digits (99) identify services. The next two digits identify the major nature of service (e.g., 9954 = construction services). The last two digits further classify the specific service type.
Frequently Asked Questions
HSN (Harmonized System of Nomenclature) is an internationally standardised 6-digit system for classifying goods. Under GST, it determines the tax rate. India uses 8-digit codes for exports and imports.
HSN codes classify goods (starting from Chapter 1–98). SAC codes classify services (Chapter 99). Both are required on GST invoices for registered businesses.
For B2C (business to consumer) invoices, HSN codes are required if your annual turnover exceeds ₹1.5 crore. For turnover below ₹1.5 Cr, HSN on invoices is optional but must be reported in GSTR-1.