Every product and service on a GST invoice carries a classification code: an HSN code for goods or a SAC for services. The code decides how the item is described in your returns and helps decide the GST rate. Here's what the codes mean, how many digits you need and how to find the right one.
What HSN stands for
HSN is short for Harmonized System of Nomenclature, the product classification maintained by the World Customs Organization and used by most countries for customs and trade statistics. India used it for customs and central excise long before GST, and GST adopted it so that the same product carries the same code everywhere in the country.
The system groups goods into 21 sections and chapters 01 to 97 (chapter 77 is reserved). India's tariff adds chapter 98 for special classifications such as project imports, and GST uses codes starting with 99 for services.
How to read an HSN code
| Digits | Level | Example | What it covers |
|---|---|---|---|
| 2 | Chapter | 19 | Preparations of cereals, flour, starch or milk; pastrycooks' products |
| 4 | Heading | 1905 | Bread, pastry, cakes, biscuits and other bakers' wares |
| 6 | Sub-heading | 1905 31 | Sweet biscuits |
| 8 | Tariff item (India) | 1905 3100 | Sweet biscuits (India's national 8-digit level) |
The first six digits are the same worldwide. The last two are India's own. The more digits you use, the more precisely you describe the product.
HSN vs SAC
SAC (Services Accounting Code) is the equivalent for services. SAC codes start with 99 and are usually six digits. For example, 9963 covers accommodation, food and beverage services, and 996331 covers services by restaurants, cafes and similar eating places. Businesses that sell both goods and services use both kinds of code.
How many digits do you need?
| Aggregate turnover in the previous financial year | Minimum HSN digits on tax invoices |
|---|---|
| Up to ₹5 crore | 4 digits on B2B invoices (optional on B2C invoices) |
| More than ₹5 crore | 6 digits on all tax invoices |
4-digit HSN code turnover limit: if your aggregate turnover in the previous financial year was up to ₹5 crore, you must show at least 4 digits of HSN on B2B tax invoices (optional on B2C). Above ₹5 crore, you need 6 digits on all tax invoices. That rule has applied since 1 April 2021 under Notification 78/2020-Central Tax; it is still the limit in 2026.
Exporters and importers use the full 8-digit code on shipping documents, as customs requires. In GSTR-1, the HSN summary (Table 12) is reported with B2B and B2C supplies on separate tabs, and the portal makes you pick codes from its master list, so invalid codes are rejected.
How to find the HSN code for your product
- Search by product name or code in our free HSN code finder, which uses the official GST portal HSN/SAC list. You can also use the search on the GST portal.
- Read the chapter and heading descriptions, not just the matching word. 'Biscuits' appears under bakery products, but 'biscuit ovens' sit in machinery.
- Check your purchase invoices. Your supplier's code is a useful starting point, but confirm it: you are responsible for the code on your own invoice.
- Check the rate notification. GST rates are notified against HSN codes and descriptions, sometimes with conditions such as a price limit per piece. Look up the code in the rate notifications.
- When in doubt, ask. For a product that could fall under two headings, ask your tax adviser. A wrong code can mean the wrong rate.
Common mistakes
- Using one code for every product in a category, even when sizes, materials or uses put them under different codes.
- Showing fewer digits than your turnover requires.
- Copying a code from an old invoice after the rates changed with GST 2.0 on 22 September 2025, without checking the new rate.
- Mixing up HSN (goods) and SAC (services), for example for installation or repair charges billed separately.
- Leaving the HSN summary in GSTR-1 to the last day instead of building it from your item master.
How VelBooks helps
In VelBooks GST billing software you save the HSN or SAC code once on each item, along with its GST rate. Every invoice then shows the right code, and your sales data is organised by HSN for your GSTR-1. Looking up a code? Use the HSN code finder.
Sources
- World Customs Organization: what is the Harmonized System
- Notification 78/2020-Central Tax (HSN digits)
- GST portal: search HSN/SAC
- GST rate notifications (GST Council)
- GST portal news and advisories
This article is general information, not legal or tax advice. Rules change; check the official sources above or consult your tax adviser.