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GST Updates

F
FR Prashanth Reddy
15/12/2017 0 0

For dealers having turnover above Rs 5 crores, it is said that 4 digits of HSN code are to be mandatorily mentioned in the invoice. Since the code is of 8 digits, could you please tell me which 4 digits are supposed to be mentioned? The first 4 or the last 4?

In order to remove any doubt regarding HSN code, let us understand the structure of the Harmonised System of Nomenclature.

At the aggregate level, the HS nomenclature consists of 21 sections (1- XXI), which contain 99 chapters. However, the effective number of chapters are only 96 as Chapter 77 is reserved for future use in the HS and the Chapters 98 and 99 are reserved for special uses by the contracting parties (WTO, 2005; GOI, 1992; Antweiler, 1995).

The basic and mandatory six-digit code (for example: 1234.56) of the HS has three parts.

  • Chapter: The first two digits (12) identify the chapter number in which the goods are classified.
  • Heading: The next two digits (34) denote broad commodity groupings within that chapter.
  • Sub-Heading: The last two digits (56) beyond this four-digit level represent more specific classification for any given commodity.

Beyond this point, every country using the HS is allowed to assign its own coding system for further disaggregation (Tariff Item).

Hence, when the Government asks for 4 digits of the HSN code, it wants to be led to the particular Heading of a particular Chapter in which your goods fall, i.e. the First 4 Digits.

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