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HSN refers to the Harmonised System of Nomenclature. It is a six-digit code for classification of the goods and services for trade and taxation purposes. HSN code was introduced in the year 1988 by the World Customs Organisation and currently, it is adopted by more than 200 countries including India. With the help of HSN code businesses classify goods and identify in which tax category. It is based on the hierarchal system in which digits in the code present the different levels of classification. The first two digits of the code represent the chapter whereas the other two digits represent the heading of the code and also the last two represent subheadings. Further, there are around 21 sections in the current HSN code and it makes GST easier and more universally accepted. HSN code is deducted from the custom tariffs used for GST purposes. Let’s discuss in detail the classification of the HSN code and the applicable GST rate on different HSN codes.

Logistics

Classification of HSN code

The HSN Code, a six-digit number, is structured into various classification levels. The composition of the HSN Code is as follows:

  • Chapter (First two digits): These digits indicate the chapter, with the HSN Code encompassing 99 chapters, which are further grouped into 21 sections based on the type of goods.
  • Heading (Next two digits): These digits specify the heading. Within the HSN Code, there are 1,244 headings that categorise goods under each chapter.
  • Subheading (Last two digits): These final digits denote the sub-heading. The HSN Code includes over 5,244 sub-headings for a more detailed classification of goods.

For instance, consider the HSN Code for “Brown rice” – 100620:

  • The “10” indicates the chapter ‘cereals’.
  • The “01” refers to the heading ‘rice’ within the cereals chapter
  • The “00” signifies the sub-heading ‘husked (brown) rice’.

Therefore, the complete HSN code for “Brown rice” is 100620. This coding system is essential for accurately classifying goods for taxation and facilitating international trade by ensuring a standarised classification of goods across countries.

HSN code for goods transportation services

For the classification of the services, the GST council linked all the GST rates to the HSN code. The Service Tax Department must use the HSN codes to levy taxes on the categories of services used. The GST rates on goods and transportation services are directly linked with the codes under the 5%, 12 percent 18% GST rates.

  • Land transport services for goods

In a SAC and HSN code, there are separate headings for the Land transport service codes as it includes different codes with different GST rates.  The majority of the land transport services of goods include the GST rates of 0% for 996511 and 996512 whereas 18% applied for the code 996519.

  • Water transport services for goods

The water transportation services of goods include delivery of goods through ships and vehicles. There are headings for the water transport services that include the codes 996521 and 996522. Among both, 996521 has a GST rate of 18% whereas no GST rate is included for 996522.

  • Air transport services for goods

This is the category in which goods are delivered to their destinations through air transportation services.  under this group, different HSN codes are covered with different GST rates.  This category includes two codes, 996531 and 996532. Both the category codes have 18% of the GST rate applicable.

GST rates for all HSN code

HSN code for the transportation services by road falls under the category of goods transportation services. The code for this category is 9965 and according to the Central Board Of Indirect Tax And Customs, this category includes different codes like 996511 for goods transport services, 996512 for passenger transport services 996513 for transport support services and many more. There are also some HSN codes for goods transportation services by freight and the list of codes includes 996521 and 996522. Additionally, if it comes to the air transportation services then it includes 996531 and 996532. Let’s check out the different HSN code GST rates:

HSN code Description of product and service GST rates (%) Cess (%)
  • Land transport services for goods
9965 Goods transport services

 

5, 12, 18 NIL

-The provisions of this serial number will not be applicable after September 30, 2020. However, they will remain applicable if the Director (Sports) of the Ministry of Youth Affairs and Sports confirms that the services are associated, either directly or indirectly, with the FIFA U-17 Women’s World Cup 2020 events. This is contingent on the condition that no input tax credit has been claimed on the goods and services used to provide these services. Furthermore, a goods transport agency that chooses to pay central tax at a rate of 6% under this clause will be obligated to continue paying central tax at 6% on all its GTA services henceforth. This is also subject to the condition that no input tax credit has been claimed on goods (excluding ships, vessels including bulk carriers and tankers) used in providing the service. Lastly, it’s stipulated that any input tax credit claimed for goods used in providing the service cannot be used to offset the payment of central tax or integrated tax on the service’s supply.

996511 The road transport services of goods include live animals, letters, containers, partners, household and office furniture etc. by trucks, refrigerator vehicles, trailers, animal-drawn vehicles or any other type of vehicles. 5, 12, 18 NIL

-The provisions of this serial number will not be applicable after September 30, 2020. However, they will remain applicable if the Director (Sports) of the Ministry of Youth Affairs and Sports confirms that the services are associated, either directly or indirectly, with the FIFA U-17 Women’s World Cup 2020 events. This is contingent on the condition that no input tax credit has been claimed on the goods and services used to provide these services. Furthermore, a goods transport agency that chooses to pay central tax at a rate of 6% under this clause will be obligated to continue paying central tax at 6% on all its GTA services henceforth. This is also subject to the condition that no input tax credit has been claimed on goods (excluding ships, vessels including bulk carriers and tankers) used in providing the service. Lastly, it’s stipulated that any input tax credit claimed for goods used in providing the service cannot be used to offset the payment of central tax or integrated tax on the service’s supply.

996512 The railway’s transportation services of goods include parcels, letters, household and office, live animals, bulk cargoes and containers. 5, 12, 18 NIL

-The provisions of this serial number will not be applicable after September 30, 2020. However, they will remain applicable if the Director (Sports) of the Ministry of Youth Affairs and Sports confirms that the services are associated, either directly or indirectly, with the FIFA U-17 Women’s World Cup 2020 events. This is contingent on the condition that no input tax credit has been claimed on the goods and services used to provide these services. Furthermore, a goods transport agency that chooses to pay central tax at a rate of 6% under this clause will be obligated to continue paying central tax at 6% on all its GTA services henceforth. This is also subject to the condition that no input tax credit has been claimed on goods (excluding ships, vessels including bulk carriers and tankers) used in providing the service. Lastly, it’s stipulated that any input tax credit claimed for goods used in providing the service cannot be used to offset the payment of central tax or integrated tax on the service’s supply.

996513 Water transport service for petroleum and natural gas, sewerage and other goods through pipeline. 5, 12, 18 NIL

-The provisions of this serial number will not be applicable after September 30, 2020. However, they will remain applicable if the Director (Sports) of the Ministry of Youth Affairs and Sports confirms that the services are associated, either directly or indirectly, with the FIFA U-17 Women’s World Cup 2020 events. This is contingent on the condition that no input tax credit has been claimed on the goods and services used to provide these services. Furthermore, a goods transport agency that chooses to pay central tax at a rate of 6% under this clause will be obligated to continue paying central tax at 6% on all its GTA services henceforth. This is also subject to the condition that no input tax credit has been claimed on goods (excluding ships, vessels including bulk carriers and tankers) used in providing the service. Lastly, it’s stipulated that any input tax credit claimed for goods used in providing the service cannot be used to offset the payment of central tax or integrated tax on the service’s supply.

  • Water transport services for goods
996521 Coastal and oversee water transportation services of goods by vessels, refrigerators, tankers, ships, cargoes and many more others. 5, 12, 18 NIL

-The provisions of this serial number will not be applicable after September 30, 2020. However, they will remain applicable if the Director (Sports) of the Ministry of Youth Affairs and Sports confirms that the services are associated, either directly or indirectly, with the FIFA U-17 Women’s World Cup 2020 events. This is contingent on the condition that no input tax credit has been claimed on the goods and services used to provide these services. Furthermore, a goods transport agency that chooses to pay central tax at a rate of 6% under this clause will be obligated to continue paying central tax at 6% on all its GTA services henceforth. This is also subject to the condition that no input tax credit has been claimed on goods (excluding ships, vessels including bulk carriers and tankers) used in providing the service. Lastly, it’s stipulated that any input tax credit claimed for goods used in providing the service cannot be used to offset the payment of central tax or integrated tax on the service’s supply.

996522 Inland water transportation services of goods by tankers, vessels and other vessels.  5, 12, 18 NIL

-The provisions of this serial number will not be applicable after September 30, 2020. However, they will remain applicable if the Director (Sports) of the Ministry of Youth Affairs and Sports confirms that the services are associated, either directly or indirectly, with the FIFA U-17 Women’s World Cup 2020 events. This is contingent on the condition that no input tax credit has been claimed on the goods and services used to provide these services. Furthermore, a goods transport agency that chooses to pay central tax at a rate of 6% under this clause will be obligated to continue paying central tax at 6% on all its GTA services henceforth. This is also subject to the condition that no input tax credit has been claimed on goods (excluding ships, vessels including bulk carriers and tankers) used in providing the service. Lastly, it’s stipulated that any input tax credit claimed for goods used in providing the service cannot be used to offset the payment of central tax or integrated tax on the service’s supply.

  • Air and space transport services for goods
996531 The transportation services through an airline of parcels, letters and other goods to be sold in the international market. 5, 12, 18 NIL

-The provisions of this serial number will not be applicable after September 30, 2020. However, they will remain applicable if the Director (Sports) of the Ministry of Youth Affairs and Sports confirms that the services are associated, either directly or indirectly, with the FIFA U-17 Women’s World Cup 2020 events. This is contingent on the condition that no input tax credit has been claimed on the goods and services used to provide these services. Furthermore, a goods transport agency that chooses to pay central tax at a rate of 6% under this clause will be obligated to continue paying central tax at 6% on all its GTA services henceforth. This is also subject to the condition that no input tax credit has been claimed on goods (excluding ships, vessels including bulk carriers and tankers) used in providing the service. Lastly, it’s stipulated that any input tax credit claimed for goods used in providing the service cannot be used to offset the payment of central tax or integrated tax on the service’s supply.

996532 The space transportation service is for freight. 5, 12, 18 NIL

-The provisions of this serial number will not be applicable after September 30, 2020. However, they will remain applicable if the Director (Sports) of the Ministry of Youth Affairs and Sports confirms that the services are associated, either directly or indirectly, with the FIFA U-17 Women’s World Cup 2020 events. This is contingent on the condition that no input tax credit has been claimed on the goods and services used to provide these services. Furthermore, a goods transport agency that chooses to pay central tax at a rate of 6% under this clause will be obligated to continue paying central tax at 6% on all its GTA services henceforth. This is also subject to the condition that no input tax credit has been claimed on goods (excluding ships, vessels including bulk carriers and tankers) used in providing the service. Lastly, it’s stipulated that any input tax credit claimed for goods used in providing the service cannot be used to offset the payment of central tax or integrated tax on the service’s supply.

  • Cargo handling services
996711 Container handling services  5, 12, 18 NIL

-Subject to the condition that the Director (Sports) of the Ministry of Youth Affairs and Sports confirms the services’ direct or indirect connection to the FIFA U-17 Women’s World Cup 2020 events. Also, a goods transport agency that elects to pay a central tax of 6% under this clause will subsequently be required to pay a central tax of 6% on all GTA services it provides. This is under the provision that no input tax credit has been claimed on the goods and services utilised in providing these services.

996712 Customs house agent services  5, 12, 18 NIL

-Subject to the condition that the Director (Sports) of the Ministry of Youth Affairs and Sports confirms the services’ direct or indirect connection to the FIFA U-17 Women’s World Cup 2020 events. Also, a goods transport agency that elects to pay a central tax of 6% under this clause will subsequently be required to pay a central tax of 6% on all GTA services it provides. This is under the provision that no input tax credit has been claimed on the goods and services utilised in providing these services.

996713 Forwarding and Clearing services  5, 12, 18 NIL

-Subject to the condition that the Director (Sports) of the Ministry of Youth Affairs and Sports confirms the services’ direct or indirect connection to the FIFA U-17 Women’s World Cup 2020 events. Also, a goods transport agency that elects to pay a central tax of 6% under this clause will subsequently be required to pay a central tax of 6% on all GTA services it provides. This is under the provision that no input tax credit has been claimed on the goods and services utilised in providing these services.

996719 Other cargo-handling services  5, 12, 18 NIL

-Subject to the condition that the Director (Sports) of the Ministry of Youth Affairs and Sports confirms the services’ direct or indirect connection to the FIFA U-17 Women’s World Cup 2020 events. Also, a goods transport agency that elects to pay a central tax of 6% under this clause will subsequently be required to pay a central tax of 6% on all GTA services it provides. This is under the provision that no input tax credit has been claimed on the goods and services utilised in providing these services.

*This information is for reference only. Readers/borrowers are requested to visit the official government websites for more information on CESS or GST rates of specific HSN codes.

Do HSN codes vary across countries?

While the basic structure of the six-digit HS code is globally recognised, there are some notable variations in certain countries. India, for instance, was the first country to implement the system and has expanded it to an eight-digit format for more precise customs control.

Similarly, the United States employs a 10-digit model for the HS code, aiming for finer product classification details. Despite these differences, the core of the system—the initial six digits—remains consistent and universally accepted in the HS code.