What is the difference between HSN code and SAC code?

HSN (Harmonised System of Nomenclature) codes are used for goods — they classify physical products in a globally standardized system. SAC (Services Accounting Code) codes are used for services — they were developed by India's CBIC to classify service types under GST.

Is HSN code mandatory on every GST invoice?

Mandatory for businesses with turnover above ₹5 crore. For ₹5–50 crore turnover, 2-digit HSN is required. For above ₹50 crore (and e-invoice mandated businesses), 6-digit HSN is required. Below ₹5 crore, it is optional but recommended.

Where can I find the HSN code for my product?

The CBIC GST portal has a comprehensive HSN search tool at cbic-gst.gov.in. You can also use the GST rate finder or consult the GST tariff schedule published by the government.

Can I use a wrong HSN code accidentally?

Using an incorrect HSN code can result in wrong GST rate application. If discovered during audit, it may lead to demand of differential tax plus interest and penalty. Always verify the HSN code from official sources.

Do freelancers and service providers need SAC codes?

Yes, once your turnover crosses ₹5 crore. Below that, SAC codes are optional. However, adding SAC codes from the start is a good practice for GST compliance and makes GSTR-1 filing easier.

HSN & SAC Codes on GST Invoice: Complete Guide + Common Codes

TL;DR: HSN codes classify goods; SAC codes classify services. How many digits you need depends on your turnover: optional below ₹5 crore, 2-digit for ₹5–50 crore, and 6-digit above ₹50 crore. Wrong codes attract penalties.

What Are HSN Codes?

HSN stands for Harmonised System of Nomenclature — a globally standardized 6-digit code system developed by the World Customs Organization (WCO) to classify products in international trade. India has extended it to 8 digits for domestic purposes.

Under GST, HSN codes appear on invoices for goods and in GSTR-1 returns. They help the government identify what goods are being sold and verify that the correct GST rate has been applied.

What Are SAC Codes?

SAC stands for Services Accounting Code — a classification system developed by India's Central Board of Indirect Taxes and Customs (CBIC) specifically for services under GST. SAC codes are 6 digits long and cover every category of service from IT to healthcare to transportation.

How Many Digits Are Required?

Turnover below ₹5 crore: HSN/SAC optional on invoice (but recommended)
Turnover ₹5 crore to ₹50 crore: 4-digit HSN/SAC mandatory on invoice
Turnover above ₹50 crore: 6-digit HSN/SAC mandatory
E-invoice mandated businesses (₹5 crore+): 6-digit HSN mandatory in e-invoice JSON
GSTR-1 reporting: 2-digit HSN summary always required in Table 12

Common HSN Codes for Goods

Stationery and Office Supplies

4820 — Registers, account books, notebooks, diaries (12% GST)
9608 — Ball pens, felt pens (18% GST)
4821 — Paper labels (18% GST)

Electronics and Technology

8471 — Laptops, computers, tablets (18% GST)
8517 — Smartphones, mobile phones (18% GST)
8443 — Printers (18% GST)
8528 — Monitors and display units (18% GST)
8504 — UPS, power banks, transformers (18% GST)

Clothing and Textiles

6109 — T-shirts, vests (5% below ₹1000; 12% above ₹1000)
6203 — Men's suits, jackets, trousers (12%)
6204 — Women's suits, dresses (12%)
5007 — Woven fabrics of silk (5%)

Food and Beverages

0902 — Tea (5% on branded; 0% on unbranded)
0901 — Coffee (5% on roasted/branded)
1905 — Bakery products, biscuits (18%)
2202 — Packaged drinking water, soft drinks (18%)

Furniture

9401 — Chairs, seating furniture (18%)
9403 — Office furniture, desks, shelves (18%)

Common SAC Codes for Services

IT and Software Services

998311 — Data processing and management services (18%)
998312 — Database and network administration (18%)
998313 — Software development and production (18%)
998314 — IT design and system analysis (18%)
998315 — Software maintenance and support (18%)
998316 — IT infrastructure provisioning (18%)

Professional and Business Services

998211 — Financial and accounting services (18%)
998221 — Legal services (18%)
998231 — Management consulting (18%)
998361 — Advertising services (18%)
998371 — Market research and opinion polling (18%)

Education and Training

999293 — Online content and subscription services (18%)
999299 — Other education and training services (18% unless exempt)
999212 — Primary and secondary education services (exempt)

Construction and Real Estate

995411 — General construction of buildings (12%/18%)
997212 — Rental of commercial property (18%)
997211 — Rental of residential property (exempt)

Transportation

996511 — Road transport of goods by GTA (5% or 12%)
996521 — Railway transport of goods (5%)
996411 — Local taxi and cab services (5%)

How to Find the Right HSN/SAC Code

CBIC GST Portal search: Go to cbic-gst.gov.in → HSN Rate Finder
GST Council notifications: Rate notifications list HSN-wise rates
GST practitioner or CA: For complex or new products, consult a professional
Advance Ruling: Apply for an Advance Ruling from your state GST authority for definitive classification (binding on you and the department)

Consequences of Wrong HSN/SAC Code

GST rate mismatch: If you use a code that attracts a lower rate, you'll be short-paying tax — this attracts interest at 18% per annum plus penalty
E-invoice rejection: IRP validates HSN codes; invalid codes cause e-invoice rejection
GSTR-1 errors: Mismatched codes create anomalies in GSTN auto-reconciliation
Audit risk: Classification disputes are a common audit trigger