HSN Codes and GST Rate Finder with Latest Updates

HSN Codes and GST Rate Finder with Latest Updates

In India, the Goods and Services Tax (GST) system has revolutionized the way businesses operate. One of the key components of this system is the use of HSN (Harmonized System of Nomenclature) codes, which play a pivotal role in ensuring uniformity and transparency in the tax structure. In this article, we will dive deep into HSN codes, their relevance in the GST framework, and how to find GST rates using the latest updates.

Understanding HSN Codes

HSN, or Harmonized System of Nomenclature, is an international system of classifying goods, developed by the World Customs Organization (WCO). It provides a standardized classification system for products based on their nature, usage, and composition. The system is used across 200+ countries and helps facilitate international trade.

In India, under the GST regime, the HSN code is used to classify goods for taxation purposes. Each HSN code corresponds to a specific category of goods and helps businesses determine the applicable GST rate. The primary purpose of HSN codes is to make trade smoother and more efficient by providing a globally recognized system for categorizing products.

Common HSN Codes and GST Rates

Why Are HSN Codes Important for GST?

1. Uniform Taxation System: HSN codes ensure that goods are taxed uniformly across all states and territories in India. By categorizing goods under specific codes, the GST system ensures clarity in tax rates.
2. Prevents Tax Evasion: By using standardized codes for products, businesses are less likely to manipulate the tax structure or underreport their taxable goods.
3. Ease of International Trade: Since HSN codes are used globally, businesses involved in international trade can use the same classification for their products in various countries, reducing confusion during cross-border transactions.
4. Simplifies Compliance: With the implementation of GST, businesses need to comply with various reporting requirements. HSN codes help businesses correctly report their sales and purchases, thereby reducing the likelihood of errors and penalties.

The Structure of HSN Codes

HSN codes are typically six digits long, though in some cases, they may go beyond six digits for further specification. Here’s how the HSN code is structured:

1. First Two Digits: Represent the chapter under which the goods fall. For example, Chapter 01 deals with live animals, Chapter 02 with meat, and so on.
2. Next Two Digits: Represent the heading, providing more detail about the product’s category. For instance, under Chapter 01, heading 01.01 deals with horses.
3. Next Two Digits: Represent the sub-heading, offering an even more specific classification of the product.
4. Additional Digits: For further classification, specific sub-categories of goods may be represented by additional digits.

For example:

• HSN Code for “Electric fans” is 8414, where:
  • 84 = Machinery and mechanical appliances
  • 14 = Electric fans and other similar appliances

GST Rates and HSN Codes

In the GST framework, the HSN code helps businesses determine the applicable tax rate for their products. GST rates are typically classified into four slabs:

• 5%
• 12%
• 18%
• 28%

The rates can also vary depending on whether a product is considered an essential or luxury item. Essential goods, such as food and medicines, are generally taxed at a lower rate, while luxury goods, such as cars and expensive electronics, are taxed at higher rates.

Each HSN code is linked to a specific GST rate. For instance:

• HSN Code 0101 for live horses is taxed at 5%.
• HSN Code 2203 for beer is taxed at 18%.

How to Use the HSN Code and GST Rate Finder

The GST Rate Finder is an essential tool for businesses and individuals seeking to know the applicable tax rates for their products and services. The Government of India offers an official GST Rate Finder that helps businesses easily identify the correct tax rate for their goods by entering the HSN code.

Steps to Use the GST Rate Finder:

1. Access the GST Portal: Visit the official GST portal (https://www.gst.gov.in/) and find the GST Rate Finder tool.
2. Enter the HSN Code: In the search bar, input the HSN code for the product you’re interested in. If you don’t know the exact code, you can search by the name of the product.
3. View the Results: Once you enter the code or name, the tool will display the applicable GST rate for that product, along with additional details such as whether it is a taxable product or exempt.
4. Verify Updates: The GST system is regularly updated to accommodate new products and services or adjustments to tax rates. It’s important to check the rate finder periodically to ensure that you’re using the most current information.

How the Tool Has Evolved:

The GST system in India is continuously updated. With each update, the list of HSN codes and their corresponding GST rates may change. To keep businesses informed, the government issues notifications regarding modifications to the tax rate or new inclusions in the HSN list.

The introduction of the HSN-based GST rate classification has provided clarity on product taxation. Prior to GST, businesses had to rely on a complex system of state-based VAT (Value Added Tax), and the HSN code system now simplifies this by standardizing goods under one umbrella.

Latest Updates on HSN Codes and GST Rates

As of the latest updates in 2025, the government has made a few significant changes to the HSN and GST system:

1. HSN Code Expansion: The list of HSN codes has been expanded to cover more goods and services, with particular focus on small and medium-sized businesses that require simpler classifications.
2. GST Rate Adjustments: Some products have seen a reduction in GST rates. For example, certain medical devices, essential commodities, and raw materials have seen a decrease in tax rates to boost industry growth and reduce costs for consumers.
3. HSN Code for Services: While HSN codes were traditionally used for goods, service industries are also required to use HSN codes. This helps in determining the GST rate for various services, from financial to hospitality services.
4. Linkage to the Invoice System: The government has integrated HSN codes with the e-invoicing system. From April 1, 2023, businesses above a certain turnover threshold have been mandated to generate e-invoices that include HSN codes. This ensures seamless reporting and minimizes errors.
5. GST on Cryptocurrency: While the GST on cryptocurrencies is still a matter of debate, some initial guidelines have been issued, and cryptocurrencies are being integrated into the GST system under specific HSN codes. It’s essential for businesses dealing with digital assets to stay updated with the latest regulatory changes.

The Future of HSN Codes and GST

As the GST system evolves, there are certain areas where further improvements can be made:

• Digitization: Increasing reliance on digital systems for GST rate discovery and compliance will make it easier for businesses, especially smaller ones, to manage their taxes.
• Clarity on Services: While goods have clear HSN codes, services can be more challenging to classify. Efforts are underway to standardize service classification.
• Simplification for Small Businesses: The government continues to work on simplifying the HSN code system for small businesses with turnover below a specified threshold, ensuring they face fewer complexities.

Conclusion

HSN codes are an integral part of the GST system, helping streamline the classification of goods and the application of tax rates. The GST Rate Finder is an essential tool for businesses and individuals, ensuring they are always aware of the tax rates applicable to their products. With the latest updates in 2025, it’s clear that the government is committed to refining and expanding the GST system, ensuring that it stays relevant and efficient for a growing economy.