Also known as: Harmonized System of Nomenclature · HSN
A 4-, 6-, or 8-digit product classification code used worldwide and required on Indian GST invoices to identify goods and their applicable tax rate.
HSN (Harmonized System of Nomenclature) is a globally standardised product classification system developed by the World Customs Organization. India uses it under the GST regime to identify goods on every invoice and to determine the applicable GST rate. SAC (Services Accounting Code) is the parallel system for services.
The number of HSN digits you must declare depends on your annual turnover in the preceding financial year. Up to ₹1.5 crore turnover — no HSN required on B2C invoices, 4-digit HSN on B2B. Between ₹1.5 crore and ₹5 crore — 4-digit HSN on all invoices. Above ₹5 crore — 6-digit HSN on all invoices. Exports and imports — 8-digit HSN mandatory. These rules apply to invoices issued; the HSN summary in GSTR-1 also follows these tiers.
Incorrect HSN classification is one of the most common GST-notice triggers in India. Two products that look similar (say, ladies' cotton kurta vs ladies' cotton blouse) can fall under different HSN codes with different GST rates, and a wrong code can mean tax shortfall plus interest plus penalty.
ReadyBooks.ai ships a built-in HSN/SAC finder with 50,000+ pre-populated codes mapped to current GST rates. You can search by product name, by chapter, or by visual category; once an HSN is assigned to an item master, every future invoice for that item picks it up automatically.