Why in news?
India released a Guidebook on Mapping of (HSN) Codes, unveiled on September 20, 2025. The guidebook maps 12,167 HSN codes to 31 ministries and departments, aiming to streamline trade policies, improve domestic manufacturing, and increase policy efficiency.
 
Key Features of the Harmonized System

• Developed by the World Customs Organization (WCO) and implemented globally.
• Contains over 5,000 product groups identified by 6-digit codes.
• Countries can extend HSN codes beyond six digits for more detailed product classification (e.g., India uses eight digits for GST).
• Used as the basis for Customs tariffs and international trade statistics.
• Supports trade facilitation by harmonizing product classification.
• Regularly updated to reflect changes in technology and trade patterns.
• Enables automation and efficiency in taxation and customs clearance.

Purpose and Usage:

• Provides a uniform classification system reducing disputes and errors in trade.
• Customs officials use them to classify goods efficiently.
• Supports Free Trade Agreements (FTA) and trade compliance.
• Helps in economic analysis and market research.
• Helps governments levy appropriate taxes and duties.

Use in India

• India adopted the HSN system as part of its GST regime.
• Under GST, all goods fall under specific HSN codes correlating with fixed GST rates.
• Certain turnover thresholds mandate the use of two-digit or four-digit HSN codes in invoices.
• Small taxpayers with turnover below Rs. 1.5 crore may be exempt from mentioning HSN codes

This system is essential in global trade for clear identification and classification of goods, reducing disputes, delays, and enhancing transparency in international commerce.

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