HSN stands for Harmonised System of Nomenclature, an internationally used system for classifying goods. Under GST, the HSN code decides the classification of goods and therefore the rate, while services use a similar Services Accounting Code (SAC).
Table 12 of GSTR-1 requires an HSN-wise summary of outward supplies, split between B2B and B2C. The portal now validates the HSN codes entered through a drop-down list, and the summary needs to match the invoice-level data. Errors here often surface later as mismatches in scrutiny.
Choosing the wrong HSN can lead to tax being paid at the wrong rate, with demand, interest and penalty following. When products could fall under two headings, follow the rules of interpretation in the customs tariff, check the explanatory notes, and consider an advance ruling for high-value items. Rates were reorganised in September 2025, so recheck the classification and rate of each product against current notifications.
Maintain a product master in your software with the HSN for each item, reviewed whenever a rate notification changes.
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This guide explains the law in general terms as of October 2026. Time limits and requirements can depend on the facts of your case and on the notice you received.
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