HSN and SAC codes: how to find the right code

Every line on a GST invoice carries a short number: an HSN code for goods or a SAC for services. It looks like admin detail, but it does real work. The code tells the tax system what you sold, which decides the GST rate. It also feeds the HSN summary in your GSTR-1, which the department matches against your sales.

This guide explains what the codes mean, how many digits you must show, and a practical way to find the right code for each item you sell.

What HSN and SAC mean

HSN stands for Harmonized System of Nomenclature. It is an international product classification maintained by the World Customs Organization and used by most countries for customs. India uses it, extended to 8 digits, in its customs tariff, and GST borrowed the same codes.

SAC stands for Services Accounting Code. It is India’s classification for services under GST. Every SAC starts with 99.

How to read a code

An HSN code narrows down from a broad chapter to a specific product, two digits at a time. Take basmati rice:

Digits	Level	Code	Meaning
2	Chapter	10	Cereals
4	Heading	1006	Rice
6	Sub-heading	1006 30	Semi-milled or wholly milled rice
8	Tariff item	1006 30 20	Basmati rice

The first six digits are the same in every country that uses the Harmonized System. The last two are India’s own.

SAC codes work the same way. Some common service headings:

SAC heading	Services
9954	Construction services
9963	Accommodation, food and beverage services
9965	Goods transport services
9973	Leasing or rental services without operator
9982	Legal and accounting services
9983	Other professional, technical and business services
9987	Maintenance, repair and installation services
9997	Other services

How many digits you must show

Notification 78/2020–Central Tax fixed the minimum from 1 April 2021, based on your aggregate turnover in the previous financial year:

Previous year’s turnover	B2B invoices	B2C invoices
Up to ₹5 crore	At least 4 digits	May be left out
More than ₹5 crore	At least 6 digits	At least 6 digits

A few points people miss:

• These are minimums. The GST Council has clarified that showing a valid longer code is fine.
• A separate rule, Notification 90/2020–Central Tax (1 December 2020), requires the full 8-digit code for a list of 49 specified chemicals, whatever your turnover.
• Turnover is counted for your whole PAN, not one branch. When it crosses ₹5 crore, switch to 6 digits from the next financial year.
• E-invoices and e-way bills carry the HSN too, so the same rules flow through.

Why the right code matters

GST rate notifications list goods by HSN. Since 22 September 2025, Notification 9/2025–Central Tax (Rate) sets the rates schedule by schedule, each entry identified by its HSN code. If you pick the wrong code, you may also pick the wrong rate. Charging too little means paying the difference yourself, with interest. Charging too much means your customer overpays and may dispute it. (For what changed in 2025, see New GST rates 2025–26.)

Codes also feed Table 12 of GSTR-1, the HSN-wise summary of your sales. From the May 2025 return period, GSTN made you pick HSN codes from a drop-down there, with separate B2B and B2C tabs. Clean codes on your invoices mean a summary that fills itself. See how to file GSTR-1.

A practical method to find the right code

1. Describe the item precisely. What is it made of? What form is it in (raw, processed, packaged)? What is it used for? “Biscuits, sweet, packaged” is better than “snacks”.
2. Search the official tool. The GST portal’s free Search HSN/SAC service lets you search by keyword or code. Our HSN code finder is a quicker way to start.
3. Read the chapter and heading, not only the line. The same product can sit in different headings depending on form. Fresh fruit and fruit preserved in sugar, for example, are in different chapters.
4. Confirm the rate in the current CBIC rate notification for that code, not on a price list or an old bill.
5. Compare with your supplier’s invoice. It is a useful hint, but your supplier can be wrong too.
6. When genuinely unsure, ask your accountant. For a high-value or recurring item, an advance ruling under Section 97 of the CGST Act gives a binding answer for your business.
7. Record it once. Save the code and rate on the item in your billing software so every invoice uses the same code.

Worked example: setting up an electronics shop

Rupa Electronics in Kolkata sells TVs, cables and services. Its turnover is ₹1.2 crore, so 4-digit codes are enough on B2B invoices.

Item	Code used	Why
LED TV 43”	8528	Monitors, projectors and television receivers
HDMI cable	8544	Insulated wire and cable
TV wall-mounting and installation (charged separately)	9987	Maintenance, repair and installation services

Two years later Rupa’s PAN-level turnover crosses ₹5 crore. From the next financial year, the shop shows at least 6 digits on every invoice, for example 8528 72 for colour television receivers. Updating the code on each product once is enough; new invoices pick it up automatically.

Services you sell alongside goods

Many shops also sell services: installation, repairs, delivery charged separately, annual maintenance contracts. Each of these needs a SAC on its own invoice line, and the GST rate follows the service, not the goods it relates to. When goods and services are sold together as one natural bundle (a “composite supply”), the law taxes the whole bundle at the rate of the main item. Whether your bundle counts as one is a judgement call, so ask your accountant once and set it up consistently.

Common mistakes

• Choosing a code by the rate you want. Classify first; the rate follows.
• Using one code for everything. A shop selling twenty kinds of products needs twenty codes, not one “general goods” code.
• Mixing up goods and services. Repair work is usually a service (SAC 9987), even if you supply small parts with it.
• Forgetting to update after turnover crosses ₹5 crore.
• Copying codes from old bills made before the September 2025 rate changes without checking the rate.

Keep codes on your products, not in your head

The easiest way to stay consistent is to store the code with each product. In Invoiqo, every product carries its HSN or SAC and GST rate, so the code prints on every invoice line and the paid plans’ GSTR-1 summary groups sales by HSN for you. Want to check a single item first? Use the HSN code finder or the GST calculator. When you are ready to bill, see Invoiqo’s plans.