HSN codes and GST rates: a practical guide for small sellers

An HSN code is a number that classifies a product for tax purposes, and in India it decides which GST rate applies and appears on your invoices. To find yours, describe your product precisely, search for it on the GST portal's HSN search or in the CBIC rate notifications, read the chapter headings to confirm the match, and note the GST rate listed. Use at least as many digits as your turnover requires, and ask a CA when a product could fit more than one code.

This guide explains how HSN codes are built, how to look them up, the common mix-ups, and how they show on your invoices. It is general information; GST rates and rules change, so confirm your own case with a CA.

What is an HSN code?

HSN stands for Harmonised System of Nomenclature, a product classification used by customs authorities around the world. India uses it for GST and for imports and exports. Services use a similar system called SAC (Services Accounting Code).

The code gets more specific as it gets longer:

The first six digits are the same in most countries, which is why exporters need to get them right.

How many HSN digits do you need on invoices?

Since 1 April 2021, the requirement for GST invoices depends on your aggregate turnover in the previous financial year:

• Up to ₹5 crore: at least 4 digits on invoices to registered businesses (B2B); optional for sales to consumers.
• Above ₹5 crore: at least 6 digits on all invoices.

Many sellers simply use 6 or 8 digits everywhere, which is more precise and avoids confusion if the business grows. Check the current notification with your CA, since rules are updated from time to time. Summary tables in GST returns also ask for HSN-wise details.

How do you find the right HSN code for your product?

1. Describe the product precisely. Not "bag" but "women's handbag, outer surface of cotton fabric". Material, use and form usually decide the code.
2. Search the GST portal. The GST portal has an HSN/SAC search where you can type a product name or code and see matches.
3. Check the rate. CBIC publishes GST rate notifications and a rate finder. Search for your HSN code or description and note the rate.
4. Read up the hierarchy. Look at the chapter and heading descriptions above your code to make sure the product really belongs there.
5. Look at your supplier's invoice. If you resell goods, your supplier's invoice shows an HSN code. It is a useful starting point, but you are responsible for your own classification.
6. Ask a CA for borderline cases. A gift hamper, a product made of mixed materials, or something that could be "food" or "medicine" needs a professional view.

What changed in GST rates recently?

GST rates are revised by the GST Council. In September 2025, the Council approved a major rationalisation that moved most goods into two main rates, 5% and 18%, with a higher rate for a small list of items and some goods exempt, effective from 22 September 2025. Many everyday products changed rate. If you set up your catalogue before then, check every product's rate against the current CBIC notifications, and keep checking after each Council meeting.

What is the HSN code for clothes?

Clothing is a common source of confusion. Garments are classified in different chapters depending on whether they are knitted or crocheted, or not knitted, and then by type and material. A knitted cotton T-shirt and a woven cotton kurta sit under different codes. Fabric sold by the metre, sarees and readymade garments each have their own headings too.

For clothing and footwear, the GST rate can also depend on the sale value per piece, with a lower rate up to a set price and a higher rate above it. Check the current threshold in CBIC's notification, and set the rate per product (or per option, if sizes or styles fall either side of the threshold).

Common HSN mistakes small sellers make

• Using one code for the whole shop. A gift store selling candles, brass idols, dry fruits and greeting cards needs different codes and possibly different rates.
• Copying codes from a random website. Unofficial lists go out of date. Use the GST portal and CBIC.
• Classifying by use instead of material. Codes usually follow what a thing is made of and its form, not how you market it.
• Mixing up goods and services. Stitching, tailoring or installation charged separately may need a SAC code.
• Ignoring bundles. A combo of items at different rates raises questions about how to tax it; ask your CA.
• Never reviewing. Rates change. Review your list after every GST Council rate change.

How do HSN codes appear on your GST invoices?

Each line on a tax invoice shows the product, its HSN code, quantity, taxable value, GST rate and tax amount, split into CGST and SGST for sales within your state or IGST for sales to another state. Our post on what a GST invoice must show lists every field, and GST basics for online sellers covers registration.

In UpMinutes, you set the HSN code and GST rate on each product once. Every order then gets a numbered GST invoice PDF with the HSN per product and the right CGST and SGST or IGST split, worked out from the shopper's state. You can also choose whether your prices include GST or have it added on top; our guide to GST-inclusive versus exclusive pricing helps you decide. Bulk invoices and tax reports for any dates make your CA's work easier.

Do you need HSN codes if you are not registered for GST?

If you are below the registration threshold and not registered, you do not issue GST tax invoices, so HSN codes do not appear on your bills. It is still worth noting the right code and rate for each product early. Marketplaces and seller apps often ask for HSN codes in product listings, and when you do register, your catalogue is ready from day one. Whether you need to register depends on your turnover, your state, what you sell and whether you sell through marketplaces, so ask a CA.

A simple routine for your catalogue

1. Export or list all your products in a spreadsheet.
2. Add columns for HSN code, GST rate and the source you checked (GST portal, CBIC notification, CA advice).
3. Group similar products so you check each type once.
4. Mark anything uncertain and send just those to your CA.
5. Enter the codes and rates in your store; in UpMinutes, the CSV import with preview makes this quicker for large catalogues.
6. Set a reminder to review after each GST Council meeting.

For quick sums while you price products, try the free GST calculator on our tools page. And if you are setting up a new store, start a free trial of UpMinutes to see GST invoices with your own products.

Filed under Payments & GST. More guides on the UpMinutes blog.