HSN & SAC Codes for Common Indian Businesses (Practical 2026 List)

"What is the HSN code for this?" is one of the most common questions small business owners ask their accountant. HSN and SAC codes look like a bureaucratic detail, but a wrong or missing code can cause mismatches in your GST returns, confuse your buyers' input tax credit, and make your invoices look unprofessional.

This guide explains what HSN and SAC codes are, how many digits you need to show, and lists commonly used codes for typical Indian small businesses. It is a starting point for your research — always confirm the exact code and current GST rate for your product or service with your CA or the official CBIC rate schedule.

Key Takeaways

• HSN (Harmonised System of Nomenclature) classifies goods; SAC (Services Accounting Code) classifies services. Under GST, SAC codes start with 99.
• Businesses with aggregate turnover up to ₹5 crore in the previous year must show at least a 4-digit code on B2B tax invoices; above ₹5 crore, 6 digits on all tax invoices.
• The code decides the GST rate. Choosing a code because it has a "lower rate" is misclassification, not tax planning.
• Your GSTR-1 includes an HSN-wise summary, so the codes on your invoices should match what you report.
• Rates were restructured in September 2025 — re-check any rate you copied from an older chart.

HSN vs SAC: A Quick Explanation

HSN is an international system developed by the World Customs Organization and used by over 200 countries. India uses an 8-digit version of it for customs and GST. The first two digits are the chapter (for example, chapter 61 is knitted apparel), the next two narrow it to a heading, and further digits get more specific.

SAC is India's classification for services, built on the same idea. All SAC codes under GST begin with 99. For example, 9983 is "other professional, technical and business services", and 998314 within it is "information technology design and development services".

How many digits do you need?

These are minimums. Many businesses use 6 or 8 digits voluntarily because it reduces ambiguity, especially when two products in the same 4-digit heading carry different rates. Confirm current requirements with your CA, as notifications on HSN reporting in returns have been updated in phases.

Common SAC Codes for Service Businesses

Services can be exempt, taxed at 5% or 18%, or fall under special rules (for example, reverse charge). The code alone does not tell you the full story, which is why we have not listed rates here — check the current rate notification or ask your CA.

Common HSN Chapters for Goods Sellers

Within each heading, rates can differ based on packaging, value or description. For textiles and footwear, for example, the GST rate has historically depended on the sale value per piece. Look up your exact item, not just the chapter.

How to Find the Right Code: A 5-Step Method

1. Describe the item plainly. "Cotton knitted round-neck T-shirt" is more useful than "Summer Tee".
2. Search the official source. The GST portal has an HSN/SAC search, and CBIC publishes rate schedules. Avoid relying only on random blog charts.
3. Check your supplier's invoice. If you resell goods unchanged, your supplier's HSN is a good starting point — but verify it, as suppliers make mistakes too.
4. Confirm the rate for that exact code. Note the date of the rate notification you are relying on.
5. Save it in your item master. Set the code once in your billing software so every invoice is consistent.

Worked Example: A Mixed Invoice

A Pune-based computer shop (turnover ₹3 crore, so 4 digits is the minimum for B2B) sells to a registered business in Pune:

Invoice total: ₹60,770 (CGST ₹4,635 + SGST ₹4,635). The rates shown are for illustration; confirm them for your product. In GSTR-1, the shop would report ₹50,000 under HSN 8471 and ₹1,500 under SAC 9987 in its HSN summary. Whether installation is a separate supply or part of a composite supply depends on the facts — this is exactly the kind of question to run past your CA.

Mistakes That Cause Trouble Later

• Using one code for everything you sell. A general store selling rice, soap and biscuits needs different codes per item.
• Copying rates from pre-2025 charts. Many rates changed on 22 September 2025.
• Mismatched HSN summary. If invoices say 8471 but your return summary says 8473, it invites questions.
• Picking a code for its rate. Classification must follow what the item actually is.

Frequently Asked Questions

Is HSN mandatory on B2C invoices for small businesses?

For turnover up to ₹5 crore, the 4-digit requirement applies to B2B tax invoices; it is optional on B2C. Showing it anyway is good practice. Note that your returns may still need HSN-wise summaries — check with your CA.

Do unregistered businesses need HSN codes?

An unregistered business does not issue GST tax invoices, so HSN rules do not apply in the same way. Many still add codes to look professional and to be ready when they register.

What happens if I use the wrong HSN code?

If the wrong code led to the wrong tax rate, you may have short-paid tax, which can lead to interest and penalties. Correct it going forward and ask your CA how to fix past invoices (often via debit or credit notes).

Can I get an official ruling on classification?

Yes — businesses can apply for an Advance Ruling on classification. It is a formal process, usually worth it only for high-value or disputed items.

Disclaimer: Codes listed here are common examples for general education and are not a substitute for professional classification advice. GST rates and reporting rules change; verify with the official CBIC schedules and your Chartered Accountant.