Goods and Services Tax (GST) is a comprehensive tax that subsumed all indirect taxes in India. HSN (Harmonized System of Nomenclature) and SAC (Services Accounting Code) are two important terms associated with GST. In this article, we will discuss all about HSN and SAC code under GST.
HSN codes are used to classify goods for taxation purposes. SAC codes are used to classify services for taxation purposes. These codes are used to identify specific items/services and tax rates applicable to them.
The HSN code contains 8 digits, while the SAC code contains 6 digits. The first 2 digits of the HSN code represent the chapter, the next 2 digits represent the heading, and the last 4 digits represent the product's specific details. Similarly, the first 2 digits of the SAC code represent the section, the next 2 digits represent the division, and the last 2 digits represent the group.
HSN and SAC codes are important for determining the correct tax rates for goods and services. The GST Council has assigned different tax rates for different goods and services based on their HSN and SAC codes. Therefore, it is necessary to determine the correct HSN and SAC codes for accurate taxation.
Businesses must determine the HSN and SAC codes for their goods and services before registering for GST. The HSN and SAC codes can be found on the GST portal or by consulting with a tax professional.
The advantages of using HSN and SAC codes are:
1. Uniform classification of goods and services across India
2. Easy identification of taxes applicable to goods and services
3. Reduction in litigation and disputes
4. Facilitation of trade and commerce
HSN and SAC codes are important for the correct taxation of goods and services under GST. Businesses must determine the correct HSN and SAC codes for their goods and services to avoid penalties and interest on unpaid taxes. The use of HSN and SAC codes also has several advantages, including uniform classification, easy identification of taxes, reduction in disputes, and facilitation of trade and commerce.
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