HSN stands for Harmonised System of Nomenclature. It is a system of 8 digit numbering to identify any product type. This is done in order to identify the product and to determine the applicable tax rate.
SAC, which serves a similar function to HSN, stands for Service Accounting Codes. It is a system of 8 digit number combinations, which helps to identify various types of services provided by service providers.
Now, not every business or service provider is required to mention such HSN or SAC codes on their invoice.
When should you be mentioning such HSN codes/ SAC codes?
The requirement of mentioning HSN is dependent on your turnover in the last year.
- If turnover is less than Rs. 1.5 crores in the previous financial year, HSN code/ SAC code is not required on the invoice,
- If turnover is between Rs. 1.5 crores to Rs. 5 crore : First 2 digits of HSN code are required, SAC code is mandatory above Rs. 1.5 crore
- If turnover is more than Rs. 5 crore : First 4 digits of HSN
- In case of import or export : 8 digits of HSN Code are mandatory
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