Goods and Services Tax (GST)

Harmonized System of Nomenclature Code

Note4Students

From UPSC perspective, the following things are important :

Prelims level : HSN Code

Mains level : Not Much

It has been made mandatory for a GST taxpayer having a turnover of more than Rs 5 crore in the preceding financial year, to furnish 6 digits HSN Code (Harmonized System of Nomenclature Code). This comes into effect from April 1.

HSN code

  • The Harmonized System, or simply ‘HS’, is a six-digit identification code developed by the World Customs Organization (WCO).
  • Called the “universal economic language” for goods, it is a multipurpose international product nomenclature.
  • Over 200 countries use the system as a basis for their customs tariffs, gathering international trade statistics, making trade policies, and monitoring goods.
  • The system helps in harmonizing customs and trade procedures, thus reducing costs in international trade.

What makes the 6 digit code?

  • A unique six-digit code has numbers arranged in a legal and logical structure, with well-defined rules to achieve uniform classification.
  • 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.
  • The HS Code for pineapple, for example, is 0804.30, which means it belongs to Chapter 08 (Edible fruit & nuts, peel of citrus/melons), Heading 04 (Dates, figs, pineapples, avocados, etc. fresh or dried), and Subheading 30 (Pineapples).
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