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Difference Between HSN and SAC Code

Difference Between HSN and SAC Code - LegalDocs

HSN Code

HSN Stands for Harmonized System Nomenclature and SAC stands for Service Accounting Code. It is an internationally adopted system for commodity description and product nomenclature system developed by the World Customs Organization (WCO). It came into existence in the year 1988. In the GST regime,  the goods and services in India are classified under two sections either in HSN Code system or the SAC Code System. Goods are classified under HSN and Services under SAC.

The HSN Code under GST and SAC code are used in almost 200 countries as a basis for their customs tariffs.  Almost 98\% of all merchandise in international trade are classified under the HSN Code. Today also people are bit confused between SAC and HSN, here in this article we will understand the difference between HSN and SAC code.

First let us understand the 21 sections of HSN code:

Sr No

Section

Products List

1

Section 1

Live Animals

2

Section 2

Vegetable and its products

3

Section 3

Animal or vegetable fats

4

Section 4

Prepared foodstuffs, Manufactured tobacco

5

Section 5

Mineral products

6

Section 6

Chemical products

7

Section 7

Plastic and rubber products

8

Section 8

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 )

9

Section 9

Wood and articles of wood, Wood charcoal, Cork and articles of cork, Manufacturers of straw, of Esparto or of Other Plaiting Materials

10

Section 10

The pulp of wood or of other Fibrous Cellulosic Material, Recovered ( Waste and scrap ) paper or paperboard, paper and paperboard and articles thereof

11

Section 11

Textile

12

Section 12

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

13

Section 13

Articles of stone, plaster, cement, asbestos, mica, or similar materials, ceramic products, glass and glassware

14

Section 14

Natural or cultured pearls, Precious or semi-precious stones, precious metals, Metal clad with precious metal, and articles thereof, Imitation Jewellery, Coins

15

Section 15

Base Metals and Articles of Base Metal

16

Section 16

Machinery and mechanical appliances, electrical equipment, parts thereof, sound recorders and reproducers, television image and such recorders and reproducers, and Parts and Accessories of such article

17

Section 17

Vehicles, Aircraft, Vessels and Associated Transport Equipment

18

Section 18

Optical, Photographic, Cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, clocks and watches, musical instruments, parts and accessories thereof

19

Section 19

Arms and ammunition, parts and accessories thereof

20

Section 20

Miscellaneous Manufactured Articles

21

Section 21

Works of art, Collectors’ Pieces a, d Antiques

 

Structure of HSN code

So we have understood the basic concept of HSN, let us first have a look at its structure, below mentioned is the structure of HSN code.


It is necessary for the Indian manufacturers to follow the 3 tiered structure of HSN.


Sr No

HSN code

Annual Turnover

1.

0

Below 1.5 crore rupees

2.

2

Above 1.5 crore - 5 crore rupees

3.

4

Above 5 crores


  • The taxpayers with the annual turnover below 1.5 crores are not required to follow HSN.

  • The taxpayers whose annual turnover is above 1.5 crores but below 5 crores will have to use 2 digit HSN code

  • The businesses whose annual turnover exceeding 5 crores will have to use 4 digit HSN code.

  • The one who deals with Import and Export have to follow 8 digit HSN code.

Digits of HSN code

The HSN has 21 sections, with 99 Chapters, about 1,244 headings, and 5,224 sub-headings. For example, all the natural commodities like vegetables, fruits, etc. come under one section.

For example, the HSN Code is (0701 10) for Potato seeds

  • The first two digits (07) will represent the chapter number under which Potato

  • The third and fourth digit (01) represents the heading number for Potatoes Fresh or Chilled

  • The last two digits (10) is the product code for Seeds

SAC Code

Services Accounting Code (SAC) is a classification system for services which is developed by the Service Tax Department of India. With the help of GST SAC code, the GST rates for services are fixed in five slabs namely 0\%, 5\%, 12\%, 18\%, and 28\%.

Indian Taxation System has categorized roughly over 120 services for levy of GST under 5 broad categories or tax-slabs.


  • The first 2 digits (99) are common for all services.

  • The next 2 digits represent the major nature of service.

  • The last 2 digits represent the detailed nature of service.


Under so many categories it is difficult to find an appropriate HSN and SAC code for the products. But you can make it easy by using HSN Code finder and SAC code search.



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