Quick answer: HSN classification determines which GST rate applies to a supply. Since 22 September 2025 the structure has been exempt (0%), 5%, 18% and a 40% rate for a narrow list of demerit and luxury goods, alongside special rates such as 3% on gold and 0.25% on rough diamonds. The 12% and 28% slabs were removed on that date.
The HSN code, or Harmonized System of Nomenclature code, is a crucial component of the Goods and Services Tax (GST) system in India. It is an internationally accepted system of names and numbers used to classify traded products. In India, the HSN code is used to classify goods under the GST regime, and it plays a vital role in determining the applicable GST rate. The HSN code consists of six digits, and it is used by businesses to classify their products and determine the applicable GST rate.
The HSN code structure is as follows:
| HSN Code Level | Number of Digits | Description |
|---|---|---|
| Chapter | 2 | Represents the broad category of goods |
| Heading | 4 | Represents the sub-category of goods |
| Sub-heading | 6 | Represents the specific product or service |
The HSN code is used to determine the applicable GST rate for a particular product or service. Since 22 September 2025 the GST rate structure has four bands: exempt (0%), 5%, 18% and a 40% rate that applies only to a narrow list of demerit and luxury goods, with special rates retained for gold (3%) and rough diamonds (0.25%). The earlier structure — 0%, 5%, 12%, 18% and 28% — applied from 2017 until 21 September 2025, when the 12% and 28% slabs were removed. The GST rate applicable to a particular product or service depends on the HSN code classification.
For example, the HSN code for cotton fabric is 5208. The GST rate applicable to cotton fabric is 5%.
| HSN Code | Goods/Services | GST Rate (%) |
|---|---|---|
| 5208 | Cotton fabric | 5 |
| 6109 | Woven garments | 12 |
| 8517 | Electrical appliances | 18 |
To calculate the total GST amount, you can use the following calculator widget:
5% 12% 18% 28% const calculateGST = () => { const basePrice = document.getElementById('base-price').value; const gstRate = document.getElementById('gst-rate').value; const gstAmount = (basePrice * gstRate) / 100; document.getElementById('gst-amount').innerText = `Total GST amount: ₹${gstAmount}`; }; document.getElementById('calculate-gst').addEventListener('click', calculateGST);The GST tax breakdown is as follows:
| HSN Code | Goods/Services | GST Rate (%) | CGST Rate (%) | SGST Rate (%) |
|---|---|---|---|---|
| 5208 | Cotton fabric | 5 | 2.5 | 2.5 |
| 6109 | Woven garments | 12 | 6 | 6 |
| 8517 | Electrical appliances | 18 | 9 | 9 |
The pre-GST tax regime had a complex tax structure with multiple taxes such as excise duty, VAT, and service tax. The GST regime has simplified the tax structure by introducing a single tax rate for each product or service.
For example, the pre-GST tax rate for cotton fabric was 12.5% (excise duty + VAT), whereas the GST rate is 5%.
| HSN Code | Goods/Services | Pre-GST Tax Rate (%) | GST Tax Rate (%) |
|---|---|---|---|
| 5208 | Cotton fabric | 12.5 | 5 |
| 6109 | Woven garments | 15 | 12 |
| 8517 | Electrical appliances | 20 | 18 |
Q: What is input tax credit?
A: Input tax credit is the credit available to a taxpayer for the tax paid on inputs used in the production or supply of goods or services.
Q: How to claim input tax credit?
A: To claim input tax credit, the taxpayer must file Form GSTR-2 and Form GSTR-3.
To avoid common billing mistakes, follow these compliance tips:
In conclusion, the HSN code is a crucial component of the GST system in India. It is used to classify goods and determine the applicable GST rate. The GST rate band (exempt, 5%, 18% or 40%) is determined by the HSN code classification, and the classification therefore decides the rate. The calculator widget can be used to calculate the total GST amount. The detailed tax breakdown and comparison with the pre-GST tax regime provide a clear understanding of the GST system. By following the compliance tips, businesses can avoid common billing mistakes and ensure accurate GST compliance.
Harmonized System of Nomenclature code, an internationally accepted system to classify traded products
To classify goods under the GST regime and determine the applicable GST rate
Six digits
To classify their products and determine the correct GST rate
Yes, it is an internationally accepted system of names and numbers used to classify traded products
Rate position checked against the GST Council's 56th meeting recommendations (3 September 2025) and the CBIC rate notifications 09/2025 to 17/2025-Central Tax (Rate) dated 17 September 2025, effective 22 September 2025.
Working on your own GST position? Get AI GST Assistance on WhatsApp for your invoices, and see how AI GST reconciliation matches your purchase register with GSTR-2B.
