CLASSIFIATION OF GOODS AND SERVICES – HSN CODES
HSN (Harmonised System of Nomenclature) code shall be used for classifying the goods under the GST regime. Taxpayers whose turnover is above Rs. 1.5 crores but below Rs. 5 crores shall use 2 digit code and the taxpayers whose turnover is Rs. 5 crores and above shall use 4 digit code. Taxpayers whose turnover is below Rs. 1.5 crores are not required to mention HSN Code in their invoices.
The GST Council, the highest decision making authority for the new tax, last week agreed to a four-tiered GST. Essential items such as food grains, one of the main reasons for rising inflation, will be taxed at zero rate. The lowest rate of 5% will be on items of common use, followed by the standard rates of 12% and 18% and the highest rate is 28%. Additionally, a cess will be added to the top 28% GST rate on luxury cars and harmful products like tobacco and fizzy drinks.