HSN/SAC Codes

HSN/SAC Codes

HSN (Harmonized System of Nomenclature) and SAC (Services Accounting Code) codes are essential for GST compliance in India. This guide explains how to configure and use these codes in EquiBillBook.

What are HSN and SAC Codes?

HSN Code: A standardized numerical code used to classify products for taxation and customs purposes. HSN codes are used for goods/products.

SAC Code: A code used to classify services for GST purposes. SAC codes are used for services.

Why Are HSN/SAC Codes Important?

• GST Compliance: Required by law for GST returns and invoices
• Tax Calculation: Determines applicable tax rates
• Reporting: Essential for GSTR-1 and other GST reports
• International Trade: HSN codes are used globally for customs

HSN Code Structure

HSN codes typically have 4, 6, or 8 digits:

• 4-digit: Basic classification (e.g., 8471 for computers)
• 6-digit: More specific classification
• 8-digit: Most detailed classification (used in India for GST)

Example: 84713020 - Laptops, notebook computers, and similar portable computers

SAC Code Structure

SAC codes have 6 digits and start with 99:

• First 2 digits: Always "99" (indicates services)
• Next 2 digits: Service category
• Last 2 digits: Specific service type

Example: 998314 - Management consulting services

Entering HSN/SAC Codes in Items

When creating or editing items:

1. Navigate to Items → Create/Edit Item
2. In the Tax section, find the HSN/SAC Code field
3. Enter the appropriate code:
   • For products: Enter HSN code (e.g., 84713020)
   • For services: Enter SAC code (e.g., 998314)
4. Save the item

Finding the Right HSN/SAC Code

To find the correct code for your item:

• HSN Code Finder: Use online HSN code search tools or government resources
• SAC Code List: Refer to GST service classification lists
• CA/Tax Consultant: Consult with a tax professional for complex items
• Industry Standards: Check what codes your industry typically uses

Common HSN Codes

Some frequently used HSN codes:

• 8471: Automatic data processing machines (computers, laptops)
• 8517: Telephone sets, smartphones
• 9403: Furniture
• 4901: Books, newspapers, and similar printed matter
• 7323: Table, kitchen, or other household articles

Common SAC Codes

Some frequently used SAC codes:

• 998311: Management consulting services
• 998312: Financial management consulting services
• 998313: Marketing management consulting services
• 998314: Human resources consulting services
• 998337: Software development services
• 998348: IT consulting and support services

HSN/SAC Code in Invoices

When creating invoices:

• HSN/SAC codes from items are automatically included
• Codes appear on printed invoices and PDF exports
• Used in GST return filing (GSTR-1)
• Grouped by code in tax reports

Importing HSN/SAC Codes

When bulk importing items:

1. Include an HSN/SAC Code column in your import file
2. Enter appropriate codes for each item
3. Ensure codes are numeric only (no spaces or special characters)
4. Validate codes before importing

Validating HSN/SAC Codes

EquiBillBook validates codes to ensure:

• Code format is correct (numeric, correct length)
• Required codes are present
• Codes are properly associated with items

HSN Code Declaration in GST Returns

When filing GST returns:

• Items are grouped by HSN/SAC code
• Sales and purchase values are summarized by code
• GSTR-1 requires HSN code-wise summary
• Ensure all codes are correctly entered for accurate returns

Updating HSN/SAC Codes

To update codes for existing items:

1. Go to Items → Items List
2. Edit the item
3. Update the HSN/SAC code in the Tax section
4. Save changes

Note: Updating codes affects future transactions. Historical invoices retain their original codes.

Bulk HSN/SAC Code Updates

To update codes for multiple items:

1. Select multiple items from the items list
2. Use bulk edit option
3. Update HSN/SAC codes
4. Apply to selected items

Or export items, update codes in Excel, and re-import.

Best Practices

• Accuracy First: Ensure codes are correct to avoid GST compliance issues
• Consistency: Use the same code for similar items
• Regular Review: Verify codes periodically, especially when adding new items
• Documentation: Keep a reference list of codes used in your business
• Seek Professional Help: Consult a CA or tax expert for complex classifications

Troubleshooting

Missing HSN Code: Add HSN/SAC code to all items; it's mandatory for GST compliance.

Invalid Code Format: Ensure code contains only digits and is the correct length (usually 4, 6, or 8 digits for HSN; 6 digits for SAC).

Code Not in Invoice: Verify item has HSN/SAC code assigned and check invoice template settings.

Related Topics

• Item Tax Configuration
• Creating Items
• GST Reports
• Bulk Item Import