What Is an HSN Code?
Open any GST bill for goods and there is a number sitting quietly beside the item name.
An HSN code is the number that classifies a product for tax. HSN stands for Harmonised System of Nomenclature, a product-coding system the World Customs Organization has run since 1988 and more than 200 countries now use. India uses it for GST, so the code on a bill decides the rate you charge and how the sale shows up in GSTR-1.
The first six digits are the world standard, and India’s Customs Tariff adds two more on the end.
How to Find the Right HSN Code for Your Product
Never pick a code by product name alone. Chapters are arranged by material and use, which is why a PVC bucket and a steel bucket sit nowhere near each other.
Three places settle it fast:
- Our HSN Code Finder.
- The government’s own HSN and SAC search on the GST portal.
- The purchase bill your supplier already raised for the same item.
Keep the GST rate finder and HSN/SAC directory on file for the codes you bill most.
Store the code once in the product master, and every bill after that pulls the same code.
How Many Digits Your Invoice Must Show
The digit count is not yours to choose. Notification 78/2020-Central Tax tied it to turnover from 1 April 2021, a split the Ministry of Finance set out at the time.
| Digits | Who prints it | Where it applies |
|---|---|---|
| 4 | Turnover up to Rs.5 crore | B2B invoices; optional on B2C |
| 6 | Turnover above Rs.5 crore | Every invoice, B2B and B2C |
| 8 | Any turnover | Exports, imports and 49 notified chemical products |
Only the first two rows come from that notification. Exports and imports run on the eight-digit Customs Tariff, and the 49 chemicals were fixed separately by Notification 90/2020-Central Tax.
Turnover here means aggregate turnover across the PAN in the preceding financial year, not one shop’s takings, so a chain whose outlets together cross Rs.5 crore moves all of them to six digits at once, and the test runs again every April against the year just closed.
From the May 2025 return period, Table 12 of GSTR-1 takes the code from a dropdown rather than free text, so an invented one will not go in.
HSN Code vs SAC Code
Goods are classified by HSN. Services take a SAC, and a restaurant serving a thali is supplying a service, which is why GST billing for restaurants works off 9963 rather than a food chapter.
| Aspect | HSN code | SAC code |
|---|---|---|
| Covers | Goods | Services |
| Length | 4, 6 or 8 digits | 6 digits, 4 under Rs.5 crore |
| Starts | Chapters 01 to 98 | Always 99 |
| Example | 85441110, wire | 996331, restaurant service |
HSN Code Example
A hardware and electricals shop in Rourkela closed FY 2025-26 at Rs.4.62 crore, so all through this year it prints four digits on its B2B bills.
| Item | At four digits | At six digits |
|---|---|---|
| Screws | 7318 | 731815 |
| PVC pipe | 3917 | 391723 |
| Winding wire | 8544 | 854411 |
Note: this is an invented example for illustration only. The codes are real tariff entries, but confirm your own classification before billing.
If FY 2026-27 closes at Rs.5.14 crore, the right-hand column becomes compulsory from 1 April 2027, on counter sales as well as B2B.
What a Wrong HSN Code Costs You
A wrong code means a wrong rate: either tax you never collected, or tax you overcharged a customer who will notice. The buyer feels it too, because their input tax credit gets queried when your rate and their claim disagree.
Wherever the digit rule applies, the code is a required field on a tax invoice under GST, not a nicety. Leaving it out or getting it wrong falls under section 125 of the CGST Act, the general penalty, which runs up to Rs.25,000 and the same again under the state Act. At Petpooja, the slip we see most is one code copied straight across a product group because two items sounded alike.
Bill GST on the Best Retail Billing Software
Get the code right once, and every bill after that picks it up on its own.
For retail businesses, Petpooja Invoice works out the GST on every invoice it generates and keeps GST reports for compliance and auditing.
For restaurants, the code on the bill is a SAC rather than an HSN. Petpooja POSS bills from the same item list and gives you day-end sales reports.
If you fix codes by hand every month end, the best retail billing software makes it a one-time job. See what your own item list looks like with every code already in place.
Frequently Asked Questions
No. HSN classifies goods and SAC classifies services, though both sit inside GST and both go on the invoice. Every SAC opens with 99, which is the quickest way to tell them apart.
Four, provided your aggregate turnover stayed at or below Rs.5 crore last financial year, and only on B2B invoices. Printing them on B2C bills too is allowed, and saves a rethink the year you cross.
A thali is a service rather than a good, so the code on that bill is SAC 9963. Where the outlet also sells packed retail items across the counter, those lines are goods and take an HSN instead.
Two things, usually. The rate goes wrong, and your buyer’s credit claim gets flagged when it fails to match your return. A missing or incorrect code can also attract the general penalty under section 125 of the CGST Act.
