HSN code
The classification code that identifies a product under GST and decides its tax rate. Services use SAC codes instead.
HSN stands for Harmonised System of Nomenclature. It is an internationally used numbering system for goods, adopted in India for GST. Every item you sell has one, and it sets the rate you charge.
How many digits you must print
The number of digits required on an invoice depends on your turnover in the previous financial year. Check the current requirement with your tax advisor before you finalise your invoice format, as the thresholds are revised from time to time.
Goods and services are coded differently
Goods carry an HSN code. Services carry a SAC code (Services Accounting Code). An invoice with both will show both.
Get it right once, at the item
Set the HSN code and tax rate on the item master, not on each invoice line. Every sale, purchase and return then picks it up automatically, and your GST returns line up with your books without manual correction.
Common mistakes
Two similar-looking products can sit under different codes and different rates. If you are unsure, confirm the code with your tax advisor rather than copying it from a supplier's invoice.