How to activate HSN code in Tally?

In Tally ERP 9, you can  set GST rates  & HSN /SAC Codes at various levels of operation in order to apply GST rates & HSN SAC codes to goods and services during voucher entry to get printed in Invoice and other reports.

Before we go; let’s understand some basics about HSN Code/SAC code

What is HSN Code ?

HSN is the abbreviation of Harmonized System of Nomenclature.

It is a system of naming  (coding) Products for quick identification during international trading. This system is introduced by World Customs Organisation (WCO).

This code is already in use in India for Import & Export of goods and service. Now implementing HSN code with GST tax system in India.

GST Act makes it mandatory to print HSN / SAC Code in the  Invoice to the following categories of business based on Turnover.

Business with Turnover  HSN CODE
Below 1.5 crore Not required
 1.5 crore to 5 crore 2 Digit HSN Code
 Above 5 crore 4 Digit HSN Code
Business deals with Import and export 8 Digit HSN Code
Business deals with service 5 Digit SAC Code

How can we find the HSN Code of the Products?

There are more than 4,000 commodity groups under HSN Code system. So, it is not easy to find out a particular product’s HSN code from the GST Portal.

The HSN Code provided in the GST Rate booklet provided by GST council contains only Four digits. As per GST Act business may require 2 digit codes, 4 Digit HSN Codes and 8 Digit HSN Codes. Let’s see how it works.

Example :  Find out the 2 digit, 4 digit & 8 Digit HSN code of PLYWOOD

There are some other websites apart from gst official sites provide you HSN Code.

  • http://www.cybex.in
  • https://www.indiafilings.com

Lets use – http://cybex.in which is commonly used as it is the most user friendly. Open this website in your browser.

Go to Menu  Indian Trade Laws > HS Classification

In above image, you will see 21 sections & 98 chapters of HSN Code.

Search look out for your relevant commodity. In the above image, PLYWOOD comes under Section 9.

If you haven’t found out the right section, you can use the search provided at the top of the page.

In Section 09,  You will Find  Chapter 44 Which states “Harmonised System Codes of Chapter 44: Wood and Articles of wood; wood charcoal“.

As PLYWOOD is the articles of wood. Click on Chapter 44 . In this page you will find Section, Chapter & Heading codes.

Under Heading Code You will find HS Codes of PLYWOOD ,VENEERED PANEL AND SIMILAR LAMINATED WOOD.

Now click on Heading code, You will get the more precise classification of plywood & veneer with 8 Digit HSN Code. Choose the right Product HSN Code.

So from this example of PLYWOOD The codes can be Identified as

2 Digit HSN Code of PLYWOOD is the Chapter code : 44

4 Digit HSN Code of PLYWOOD is the Chapter Code (44) + Heading Code (12) : 4412

6 Digit HSN Code of PLYWOOD is the  Chapter Code (44) + Heading Code(12) + Product Code : (31) : 441231

8 Digit HSN Code of PLYWOOD is the  Chapter Code (44) + Heading Code(12) + Product Code : (31) + Product Sub Division Code (10) = 44123110.

Also read:

Guide on How to Create GST Invoice in Tally.ERP 9 – With HSN Code?

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