HSN and SAC Codes under GST: 4-Digit vs 6-Digit vs 8-Digit Mandates & Rate Finder (2026)
A complete 10-minute guide to HSN and SAC codes under GST: turnover mandates, B2B vs B2C rules, code structure, tax rate mapping, and avoiding penalties.
Under Goods and Services Tax (GST) in India, every product and service must be classified using standardized international codes: HSN (Harmonized System of Nomenclature) for physical goods and SAC (Services Accounting Code) for services.
Failing to mention the correct HSN or SAC code on tax invoices leads to GSTR-1 return filing rejections, incorrect tax rate application, and penalties under Section 125 of CGST Act.
In this comprehensive 10-minute compliance guide, we explain HSN vs SAC code differences, 4-digit vs 6-digit vs 8-digit turnover mandates, B2B vs B2C reporting rules, and how to map tax rates accurately on sales invoices.
1. What are HSN and SAC Codes?
HSN Code (Goods) SAC Code (Services)
┌──────────────────────────────┐ ┌──────────────────────────────────┐
│ 2, 4, 6, or 8 Digits │ │ Always 6 Digits (Starts with 99) │
│ Classifies Physical Products │ ─────────────► │ Classifies Services Rendered │
│ Used Worldwide (WCO Standard)│ │ Specific to Indian GST System │
└──────────────────────────────┘ └──────────────────────────────────┘
- HSN (Harmonized System of Nomenclature): A multipurpose 6-to-8 digit international product nomenclature developed by the World Customs Organization (WCO) to classify over 5,000 commodity groups.
- SAC (Services Accounting Code): A 6-digit classification code created specifically by the Central Board of Indirect Taxes and Customs (CBIC) in India to classify service transactions (all SAC codes start with digits
99).
2. Turnover-Based HSN/SAC Digit Mandates
The number of HSN digits required on tax invoices depends on your business's Aggregate Annual Turnover (AATO) in the preceding financial year:
| Aggregate Annual Turnover (AATO) | Minimum HSN Digits Required for B2B Invoices | Minimum HSN Digits Required for B2C Invoices |
|---|---|---|
| Up to ₹5 Crore | 4 Digits | Optional (Recommended 4 Digits) |
| Above ₹5 Crore | 6 Digits | 6 Digits |
| Import / Export (International Trade) | 8 Digits | 8 Digits |
⚠️ Critical Rule: For 49 chemical, pharmaceutical, and explosive products listed under CBIC Notification 90/2020, 8-digit HSN codes are mandatory regardless of turnover!
3. How to Read HSN Code Structure (Example: HSN 6105.10.10)
Understanding the 8-digit breakdown helps businesses avoid misclassification:
HSN 6105.10.10 Breakdown:
├── 61 (Chapter 61: Articles of apparel & clothing accessories, knitted)
├── 6105 (Heading 6105: Men's or boys' shirts, knitted or crocheted)
├── 6105.10 (Sub-heading: Of Cotton)
└── 6105.10.10 (Tariff Item: Men's shirts of cotton, handloom)
4. How to Read SAC Code Structure (Example: SAC 9983.11)
All service codes begin with 99:
SAC 9983.11 Breakdown:
├── 99 (Section: All Services)
├── 9983 (Major Heading: Other professional, technical & business services)
└── 9983.11 (Detailed Service Code: Management consulting services)
5. Penalties for Mentioning Wrong HSN / SAC Codes
Mentioning incorrect HSN/SAC codes or omitting them on B2B tax invoices causes major compliance issues:
- GSTR-1 Portal Rejection: The GST Portal blocks GSTR-1 filings if HSN summary fields do not match the mandatory 4-digit or 6-digit rules.
- General Penalty (Section 125): Penalty of up to ₹50,000 (₹25,000 CGST + ₹25,000 SGST) for issuing incorrect tax invoices.
- ITC Disallowance for Buyers: Recipients cannot claim Input Tax Credit if the invoice carries a mismatched HSN rate code!
6. Frequently Asked Questions (FAQ)
Q1: Where can I find the official HSN/SAC code list for my products?
You can search the official CBIC HSN Code Directory directly on the GST Portal (gst.gov.in) or use ForkOST's built-in HSN Rate Finder.
Q2: What if a single invoice contains items with different HSN rates?
Each line item on a tax invoice must display its specific HSN/SAC code, taxable value, and applicable GST rate (5%, 12%, 18%, 28%).
7. Conclusion
Automating HSN and SAC code selection in your billing software ensures that every sales invoice carries the correct GST rate and satisfies statutory turnover mandates.
👉 Try ForkOST Auto-HSN Billing Software — 14-day free trial, built-in HSN finder, 4/6/8-digit validation, and GSTR-1 HSN summary export.
👉 Watch HSN Classification Guide at ForkOST Academy — video tutorials and HSN rate reference charts.