What is the News?
The Government makes the 6 digit HSN (Harmonized System of Nomenclature) code mandatory for a GST taxpayer having a turnover of more than Rs 5 crore in a financial year. This rule comes into effect from April 1,2021.
About HSN Code:
- The HSN Code is a six-digit identification code. The World Customs Organization (WCO) developed this code in 1988.
- Purpose: It is an international nomenclature for the classification of products. It allows participating countries to classify traded goods on a common basis for customs purposes.
- The code, also called the universal economic language for goods, is a multipurpose international product nomenclature.
- The HSN code currently comprises around 5,000 commodity groups. Each Code is a unique six-digit code that has numbers arranged in a legal and logical structure. There are well-defined rules to achieve uniform classification.
- Of the six digits, the first two denote the HS Chapter, the next two give the HS heading, and the last two give the HS subheading.
- Significance: HSN Code helps in harmonizing customs and trade procedures. Thus, it reduces the costs of international trade.