GST HSN Code A complete description of 2025

The GST HSN code is something that is of interest to every business in India that is doing business in the country as well as abroad. With GST (Goods and Services Tax) now central to Indian taxation, knowing how the HSN (Harmonised System of Nomenclature) code impacts your compliance, invoices, and product classification is a must for anyone handling goods or services.

This article talks of everything about GST HSN code in India in 2025; what it means, what it is used, how to get the right code, who needs it, and examples, common questions and news. It is founded on the current GST laws and on the ground experiences, so that you do not commit compliance mistakes and you get GST right at the very outset.

What is HSN Code in GST and Why it is important?

SN code is a set of codes that are numerical, which are developed by the World Customs Organization to facilitate classification of the products in regard to taxation, trade and statistics. The GST regime has standardised the procedure of identification and taxation of goods in India through the use of HSN codes.

What is the role of the HSN code system in the GST compliance?

The application of the HSN codes will make it easier to the businesses and the tax authorities to:

• Find the right GST rates of commodities
• Remove misconceptions in the inter-state and international trade
• Tax invoices and tax filing should be consistent
• Facilitate the documentation of importation and exportation Ease the documentation of importation and exportation

Being an entrepreneur in the textile industry, I have seen how the manufacturers have cut down on controversies and cases of audits by just charging the correct HSN code on bills. The code to be used on products is useful even to the small wholesalers, as they do not want to end up being penalized later.

You were not aware of it? In India, HSN codes were implemented in the year 1986 to be used in Central Excise long before the introduction of GST, but it is now made mandatory under GST except in few sectors.

Who is the one required to Use an HSN Code under GST?

Every business registered on GST may have to put HSN code in their invoice but this will depend on your annual turnover.

Who is not obliged to use HSN codes in GST in 2025?

According to the recent reports it is stated that:

• The businesses that have a turnover of up to 5 crores are not required to have HSN codes on their B2C invoices, but 4 digit HSN code must be used on the B2B invoices.
• You are required to use 6 digits HSN codes on every invoice in case of annual turnover above 5 crores.
• According to the international standards of trade, the exporters and importers will always use 8 digit HSN.

This makes it easier to comply with micro and small businesses but also it is good to know when you have surpassed the limit.

Key highlights:

• HSN code usage depends on turnover and nature of sales (B2C vs B2B)
• More digits = higher precision (and more applicable for exporters)
• In the online marketplace in India, the HSN codes are automatically filled, which simplifies GST filing on behalf of small sellers

How can businesses find out the correct HSN code of their products?

To find the correct code

• Access the official GST portals or directories on HSN codes that are free.
• The directory provides names (common English names or trade names) of your product.
• Check with your industry association or with your CA, in case you are not certain.
• When listing online marketplaces, make sure to review the HSN recommended by the platform, and also review it with official lists.

My personal experience tells me that there is a possibility of mismatch notices being received in case of wrong usage of HSN code by the GST authorities. Code cross checking is a good practice to be performed once a year, or with any change of Budgets.

Insider tip: HSN codes are still discovered in WhatsApp groups, or through informal consultations, by many small enterprises. One should use the suggestions only, which can be verified on the official GST site.

How does an HSN Code look like?

The HSN codes are logical in structure and hence easy to comprehend. It will be numbered as under:

How is HSN code different to SAC code under GST?

• SN code is used in the identification of goods
• SAC (Services Accounting Code) is used for services under GST
• The two are needed so that the items in the invoice can be classified appropriately

Other questions are also asked by people.

How is HSN and SAC distinction in invoices done?
Enter HSN for the list of products and SAC for services. In case both of them are covered in your invoice, then you can mention both codes.

What is the necessity of HSN Code under GST?

The main reason behind the introduction of HSN in GST was to provide uniformity and to remove the ambiguity of classification of goods. Before, the VAT, Excise and GST had different codes and this caused confusion in the inter-state and import transactions.

Advantages of SN

• Interstate uniform product classification
• Does not impose arbitrary rates of taxes and litigation
• Assists in trading with the other nations having the same HSN codes
• Enhances reporting, and increases the compliance of taxpayers

What are the Prons and Cons of HSN codes?

Pros:

• Easy standardisation
• Faster filing and audit search of GST
• Enables auto-charging of online stores

Cons:

• The innovative or mixed products may end up confusing
• Government inquiries can occur due to mistakes on the selection of codes
• The alterations in the HSN code lists must be treated seriously on yearly basis

You were not aware of it? The government continues to revise the list of HSN codes. The revisions in 2023 introduced new codes that relate to electric vehicles and green tech products.

How will the mentioning of HSN Codes in GST Invoices be in 2025?

The mention of the HSN code on every invoice in the right way is not optional. It’s a legal requirement under India’s GST rules.

What is the procedure of listing the HSN codes on the GST invoices?

• Write the description of the items next to HSN or SAC code
• Use minimum digits as per your turnover (see previous table)
• Ensure that HSN code is the same as the bill item and not similar product
• In case of multiple products, every line should be assigned with its HSN code
• 8 digits code should be used in export

Other questions are also asked by people.

Can the HSN codes be written in word or numerical form only?
The number form of HSN code is the only type of HSN code which can be used on GST invoices.

What would be the impact of me stating the wrong HSN?
The returns that you make can be found to be a mismatch and can be raised with queries/additional tax/payment by the GST authorities.

Examples of Practical Applications and the Common HSN Codes in 2025

Some of the frequent HSN codes that will be employed in the year 2025 along with the emerging sectors are as shown in the table below.

The codes can be applied to help the buyers and the sellers find the products in online market places and ensure the taxation.

What is the process of altering the HSN code of my product on e-commerce?

• Go to www.sellers.amazon.com and log in.
• The current HSN is seen in product details
• The official GST HSN look up should be used to check the latest code
• Update if necessary (especially after yearly GST updates or Budget)
• Amendment and query on the GST portal

Industry expertise: The automated taxation tools are being launched in most of the e-commerce firms to automatically keep the HSN codes updated with the government lists and this is also making the life of the sellers very easy.

Areas of focus and Mainstreams of HSN Code System in 2025

• Most of the GST-registered firms in India are obligated to do so
• Codes are not fixed since new products are coming up to be used in the market
• In E-invoice systems, HSN code is automatically retrieved in cases of reoccurring goods
• The HSN is standardised on online marketplaces, and the sellers do not make mistakes.
• Enables the central and state governments to track the information that is based on a supply chain

What are the Pros and Cons of Using HSN Codes of GST?

Pros

• Global standard
• Takes away classification debate
• Enables standardised data to be compiled
• Streamlines rebate and refunds
• All Indian GST filing software have adopted it

Cons

• Home grown or innovative products are confusing
• Should constantly be updated on the updates
• There are situations when the mix of two very similar products takes place
• Minor errors can end up in a legal or penalty nuisance

Other questions are also asked by people.

Is it required to submit HSN code in GSTFiling when it is service business?
No, they must use SAC codes instead of HSN by the service providers.

The General Mistakes in HSN Codes

As per the recent audits of GST and expert panels, the common mistakes are as follows:

• Duplicating HSN of a rival without verification in the industry
• The inability to oak to do post-government notification update
• Error in the description and HSN digits coding of the product
• Misuse of services SAC code of goods or goods SAC code of services
• Leaving out the HSN digits which in some cases indicate the turnover category

In my personal case, one of my retail customers misinterpreted the code of led lights, was flagged in their GST R1 return resulting in wasting of time clarifying the error. Such is the hassle that could be avoided by doing a check twice before the quarterly filing is done

Comparison between HSN code and SAC code

You were not aware of it? Most of the GST software can distinguish between the HSN and SAC codes when configured as such.

Summary or Short Version

• HSN codes are numerical codes of goods between at least 2 and a maximum of 8 digits that most businesses in India must be registered with GST on the basis of the turnover.
• The code helps in standardisation of tax and the GST compliance is easy in the domestic and international trade as well.
• Choose the correct HSN of all the products, revise the same regularly and compare it with the official GST lists- particularly following the annual government notification or introduction of new products.
• The online marketplaces simplify HSN selection, since they automatically incorporate lists, but the supplier will be in charge of their accuracy.
• The incorrect HSN codes in the invoice can result in GST returns mismatch and penalty, so prepare yourself in 2025.

People also ask

How to search HSN code of a product in India?
Visit gst.gov.in, click on the search HSN code tab and enter your product description and click the corresponding listing.

What is the penalty of failure to mention the correct HSN code?
A: Penalty can be either in form of a fine up to Rs 25,000 or even a possible withholding of the input tax credit depending on the nature and the intention.

Which are the businesses that are not covered at all in HSN codes?
In 2025, only such businesses that are registered under GST Composition Scheme and have a turnover of less than 1.5 crores will be exempted in full of HSN codes in their invoices.

How do online marketplaces treat HSN code compliance of sellers?
In most of the market places now you will need to enter HSN codes when listing a product and then the tax rates will be adjusted accordingly based on the code but it is always good to cross check and make sure that everything is right.

Does a product exist, with the same HSN code as another one?
No, all the various categories of goods will be given different HSN code even though goods that are almost similar may have very similar HSN codes.

To learn more about the new rules of GST and changes in HSN codes in 2025, you can visit the official GST Council site or consult with the well-known CA professionals.

Sources:

• Goods and Services Tax Council (GST Council): GST Portal – Goods and Services Tax

• Central Board of Indirect Taxes and Customs: CBIC – Central Board of Indirect Taxes and Customs

• Income Tax Department, Government of India: Income Tax India – Government of India