HSN and SAC Codes, Explained

What HSN and SAC are

HSN (Harmonized System of Nomenclature) is an internationally used system for classifying goods. SAC (Services Accounting Code) does the same for services. Under GST, every product and service maps to a code, and that code determines the applicable tax rate. Get the code right and the rate follows; get it wrong and you may charge the wrong tax.

How many digits you must show

The number of HSN/SAC digits you must display depends on your aggregate turnover — smaller businesses show fewer digits, larger businesses show more (up to 6–8 digits), and e-invoicing has its own requirements. Showing too few digits, or none, on invoices and in GSTR-1 is increasingly flagged by portal validations.

Where codes appear

• On every tax invoice, against each line item
• In the HSN-wise summary of GSTR-1
• In e-invoices and e-way bills
• In your billing software’s product/service master

Getting classification right

Classification can be genuinely tricky — similar products can sit under different headings with different rates, and the correct code depends on the nature and use of the item, not just its name. When in doubt, it’s worth checking rather than copying a code from a supplier’s invoice. We help set your product/service master with correct codes so every invoice and return is consistent.