Harmonized System of Nomenclature (HSN) and Service Accounting Code (SAC) will be new concepts for most businesses, even though they have been borrowed from existing systems. Businesses need to determine the HSN and or SAC of the goods and services that they sell, since these are mandatory fields in a GST compliant invoice.
HSN is an internal system of naming goods. HSN is assigned to goods by organizing them in a hierarchical manner and is 8 digits long. However, a good can be identified broadly by using no less than 2 digits, and very specifically by using all the 8 digits. Depending on the turnover or nature of sale, a business might be required to quote a 2-digit HSN, a 4-digit HSN or an 8-digit HSN (mandatory for exports).
SAC is the nomenclature adopted by the GST Council for identifying services delivered under GST. This is similar to the classification that was in existence under the Services Tax regime. Here are some SACs
♦ A business whose turnover is less than INR 1.5 crore need not quote HSN in the invoice
♦ A business with turnover between INR 1.5 crore and INR 5 crore will need to quote a 2-digit HSN
♦ A business with turnover equal to or greater than INR 5 crore will need to quote a 4-digit HSN
♦ All exports will need to quote 8-digit HSN in the invoice
♦ Small businesses under composition scheme will not be required to mention HSN codes in their invoices
♦ At the time of registration/migration, the business taxpayer will be required to mention HSN code of the goods he deals with during registration.
How are products classified under HSN code?
A product is classified under sections, chapters, headings, and subheadings.
HSN Code format – [xx] Chapter -[xx] Heading-[xx xx] Subheading.
What is UQC?
UQC stands for Unique Quantity Code. In simple terms, it is a unit of measurement such as 1 kilogramme of wheat, 1 litre of oil etc.
What is UQC in GST?
As per CGST Rules, any tax invoice, credit note, debit note must have UQC or quantity unit description.
HSN - SECTION WISE Summary of Outward Supplies
Live Animals, Animal Products
Animal or Vegetable Fats and Oils and their cleavage products, prepared edible fats, Animal or Vegetable waxes
Prepared Foodstuffs, Beverages, Spirits and Vinegar, Tobacco and Manufactured Tobacco Substitutes.
Product of the chemicals or allied Industries
Plastics and articles thereof, Rubber and articles thereof
Raw hides and skins, Leather, Furskins and articles thereof, saddlery and harness, travel goods, handbags and similar containers, articles of animal gut ( other than silk-worm gut )
Wood and articles of wood, Wood charcoal, Cork and articles of cork, Manufacturers of straw, of Esparto or of other Plaiting Materials, Basketwork and Wickerwork
Pulp of wood or of other Fibrous Cellulosic Material, Recovered ( Waste and scrap ) paper or paperboard, paper and paperboard and articles thereof
Textile and textile articles
Footwear, Headgear, Umbrellas, Sun Umbrellas, Walking-sticks, seat-sticks, whips, riding-crops and parts thereof, Prepared feathers and articles made therewith, Artificial flowers, Articles of human hair
Articles of stone, plaster, cement, asbestos, mica, or similar materials, ceramic products, glass and glassware
Natural or cultured pearls, Precious or semi-precious stones, precious metals, Metal clad with precious metal, and articles thereof, Imitation Jewellery, Coins
Base Metals and articles of Base Metal
Machinery and mechanical appliances, electrical equipment, parts thereof, sound recorders and reproducers, television image and souch recorders and reproducers, and Parts and Accessories of such article
Vehicles, Aircraft, Vessels and Associated Transport Equipment
Optical, Photographic, Cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, clocks and watches, musical instruments, parts and accessories thereof
Arms and ammunition, parts and accessories thereof
Miscellaneous Manufactured Articles
Works of art, Collectors’ Pieces and antiques