HSN Code & SAC Code — Complete Guide for Indian Businesses
Everything you need to know about HSN and SAC codes under GST in India. Learn what they mean, how to find the right code for your product or service, when they are mandatory, and how to use them correctly on invoices and GST returns.
HSN Code
Harmonised System of Nomenclature — an internationally recognised 8-digit code used to classify physical goods for GST, customs, and trade purposes.
SAC Code
Services Accounting Code — a 6-digit code developed by CBIC to classify every type of service under the GST framework in India.
Why It Matters
HSN and SAC codes determine the correct GST rate to apply, enable ITC matching, and are mandatory on invoices and GST return filings above certain thresholds.
Who Needs It
All GST-registered businesses — traders, manufacturers, service providers, freelancers, and e-commerce sellers — need to use the correct codes on every transaction.
What is an HSN Code?
HSN stands for Harmonised System of Nomenclature. It is an internationally standardised system of names and numbers developed by the World Customs Organization (WCO) in 1988 to classify goods traded across the world. Over 200 countries use the HSN system, making it the global language of product classification.
In India, HSN codes were adopted for GST purposes to bring uniformity to the classification of goods. Before GST, different states had different product codes for VAT — HSN standardised this across the country. Today, every physical product that a business sells under GST must be identified with its HSN code.
The HSN code serves two core functions in the GST system:
Determines GST Rate
The GST rate applicable to a product is linked to its HSN code. The same product must always use the same GST rate, regardless of who is selling it.
Enables Uniform Classification
HSN codes ensure that a 'mobile phone' is classified the same way by every seller in every state, removing ambiguity from tax calculations.
Required for ITC Matching
When a buyer claims ITC, the GST system cross-references the HSN codes on both the supplier's GSTR-1 and the buyer's GSTR-2B to validate the claim.
Mandatory for E-invoicing
Businesses above the e-invoicing threshold must include a minimum 6-digit HSN code on every e-invoice generated through the GST portal.
What is a SAC Code?
SAC stands for Services Accounting Code. Unlike HSN codes which were adopted from an international system, SAC codes were developed specifically by India's Central Board of Indirect Taxes and Customs (CBIC) to classify every type of service under the GST framework.
Every SAC code is 6 digits long. The first two digits are always 99, which signals that the code refers to a service (not a good). The next two digits identify the service category, and the last two digits identify the specific type of service within that category.
SAC Code Structure Example
99
Services indicator (always 99)
83
Category: Business support services
14
Specific: IT consulting & advisory
Full SAC: 998314 — IT consulting and support services (18% GST)
Freelancers, IT professionals, consultants, transporters, restaurant owners, and any other service provider registered under GST must include the relevant SAC code on all their GST invoices.
HSN vs SAC Code — Key Differences
A side-by-side comparison of both classification systems.
| Aspect | HSN Code | SAC Code |
|---|---|---|
| Full Form | Harmonised System of Nomenclature | Services Accounting Code |
| Used For | Classification of goods and products | Classification of services |
| Number of Digits | 2, 4, 6, or 8 digits | 6 digits (always) |
| Origin | World Customs Organization (WCO) | Developed by CBIC for India |
| Industry Type | Manufacturing, trading, e-commerce | IT, consulting, transport, hospitality |
| GST Invoice | Mandatory field for goods invoices | Mandatory field for service invoices |
| Applicability | Goods suppliers registered under GST | Service providers registered under GST |
| Example | 8517 — Mobile phones | 998314 — IT consulting services |
HSN Code Structure — Breaking it Down
HSN codes go from broad to specific. The more digits, the more precise the classification. Here is how each level works, using mobile phones as the running example.
Chapter
Identifies the broad product category or chapter.
Example: 85 = Electrical machinery and equipment
Heading
Narrows down to a specific product group within the chapter.
Example: 8517 = Telephone sets, smartphones, and communication devices
Sub-heading
Further classifies into a sub-type within the heading.
Example: 851712 = Mobile phones for cellular networks
Tariff Item
Most specific level — used for customs duty and detailed GST filing.
Example: 85171200 = Smartphones — most granular classification
Common HSN Code Examples
A quick reference table for some of the most commonly traded goods in India.
| Category | HSN Code | GST Rate |
|---|---|---|
| Mobile Phones | 8517 | 18% |
| Laptops / Computers | 8471 | 18% |
| Men's Shirts | 6205 | 12% |
| Women's Kurtas | 6211 | 12% |
| Rice (Branded) | 1006 | 5% |
| Office Furniture | 9403 | 18% |
| Refrigerators | 8418 | 18% |
| Cement | 2523 | 28% |
| Books (Printed) | 4901 | 0% |
| Medicines / Drugs | 3004 | 12% |
Rates are indicative and subject to GST Council revisions. Always verify on the official GST portal.
Common SAC Code Examples
Frequently used SAC codes for service businesses and freelancers in India.
| Service Type | SAC Code | GST Rate |
|---|---|---|
| IT / Software Services | 998314 | 18% |
| Web Development | 998313 | 18% |
| Digital Marketing | 998361 | 18% |
| Management Consulting | 998311 | 18% |
| Freight Transport (Road) | 996511 | 5% |
| Restaurant Services | 996331 | 5%/18% |
| Accounting Services | 998222 | 18% |
| Graphic Design | 998392 | 18% |
| Legal Services | 998211 | 18% |
| Hotel / Accommodation | 996311 | 12%/18% |
Restaurant and hotel GST rates vary based on type of establishment and tariff slab. Verify with a CA for your specific case.
How to Find the Correct HSN or SAC Code
Follow these steps to identify the right code for your product or service — and avoid costly misclassification.
Identify Your Product or Service
Start by clearly defining what you are selling. For goods: describe the material, use, and type. For services: describe exactly what you provide (e.g., 'software development for mobile apps').
Use the GST Council's HSN Search Tool
Visit the official GST portal (gst.gov.in) and use the HSN/SAC code search. Type keywords from your product or service description to get matching codes.
Check the CBIC Tariff Schedule
The Central Board of Indirect Taxes and Customs (CBIC) publishes the complete HSN tariff schedule. Search for your product chapter (e.g., Chapter 85 for electronics) and find the exact heading.
Match the Description Carefully
Read the official description of each code and compare it against your product or service. The code whose description most closely matches your offering is the right one.
Verify the GST Rate
Once you have the HSN or SAC code, verify the GST rate applicable to it. Use our GST calculator or check the rate schedule on the GST portal to confirm.
Consult a CA for Ambiguous Cases
If your product or service falls under multiple possible codes, consult a Chartered Accountant. Using the wrong code can lead to GST demand, interest, and penalties during audits.
HSN Code Requirements Under GST
The number of HSN digits required on invoices and GSTR-1 depends on your annual turnover.
Up to ₹1.5 crore
₹1.5 crore – ₹5 crore
Above ₹5 crore
E-invoicing (above ₹5 crore)
Where to Use HSN and SAC Codes
HSN and SAC codes appear in three key places in the GST ecosystem.
GST Invoices
- •HSN code must appear on every tax invoice for goods (subject to turnover threshold).
- •SAC code must appear on every tax invoice for services.
- •Correct codes ensure the buyer claims the right ITC and avoids mismatches.
- •Use our invoice generator to add codes automatically.
GST Returns (GSTR-1)
- •GSTR-1 requires HSN/SAC-wise summary of outward supplies.
- •The HSN summary table in GSTR-1 groups your sales by product category.
- •Errors in HSN codes here cause reconciliation failures with buyer's GSTR-2B.
- •Consistent HSN usage across invoices and returns is essential.
E-way Bills
- •E-way bills require the HSN code of the goods being transported.
- •The HSN code in an e-way bill must match the invoice being referenced.
- •Mismatched HSN codes are a common reason for goods being detained at checkpoints.
- •Always use the same HSN on the invoice and e-way bill for the same consignment.
Common HSN/SAC Code Mistakes to Avoid
These are the most frequent errors businesses make with product and service classification under GST.
Using a Generic HSN Code for All Products
Some businesses use a single broad HSN code (like 9999) for all their goods. Each product must have its specific, correct HSN code. Wrong codes lead to incorrect GST rates and ITC mismatches.
Using an HSN Code for a Service (or Vice Versa)
HSN codes are for goods. SAC codes are for services. Using an HSN code on a service invoice — or a SAC code on a goods invoice — is a compliance error that can affect ITC and filing accuracy.
Not Updating HSN Codes After Rate Revisions
The GST Council periodically reclassifies products and changes their HSN codes or rates. Always verify that the HSN code you used last year still applies to the same rate today.
Using 2-digit HSN When 4-digit is Required
Businesses above ₹5 crore turnover must use at least a 4-digit HSN. Using only 2 digits is non-compliant and can create issues during GSTR-1 filing and e-invoice generation.
Guessing the HSN Code Without Verification
Never guess or approximate an HSN code. Even a close-sounding code can carry a different GST rate. Always search the official HSN schedule or consult a CA for confirmation.
Omitting HSN/SAC from Invoices
Even if you are below the mandatory threshold, including HSN/SAC codes on your invoices is considered best practice. It helps your buyers, reduces audit risk, and makes GST return filing more organised.
Frequently Asked Questions
Common questions about HSN and SAC codes under the GST system in India.
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