HSN and SAC codes are the classification system GST uses to tag every product and service. Pick the wrong code on your first invoice and you will be untangling Show Cause Notices for months. Pick the right one and your registration, returns, and ITC all flow cleanly.

This guide explains how to find the right HSN code (for goods) and SAC code (for services), with a simple lookup process and the mistakes small businesses make most often.

What are HSN and SAC codes?

HSN (Harmonized System of Nomenclature) is a globally standardised code system for goods, developed by the World Customs Organization. India uses 4, 6, and 8-digit variants depending on turnover.

SAC (Service Accounting Code) is India's 6-digit code system for services. Every service sold under GST gets tagged with a SAC.

Who needs to use HSN/SAC codes?

Every GST-registered business
E-commerce sellers uploading product catalogues
Freelancers and consultants issuing service invoices
Manufacturers declaring products at customs
Traders filing GSTR-1 summaries

Benefits of picking the right HSN/SAC

Correct GST rate applied - no under/overcharging
ITC claimed cleanly without reversal
GSTR-1 uploads accepted first time
Zero officer queries during registration
E-way bills generate without error

HSN digits required by turnover

Up to ₹5 crore turnover: 4-digit HSN on B2B invoices (optional on B2C)
Above ₹5 crore turnover: 6-digit HSN mandatory on all invoices
Exports/imports: 8-digit HSN always

Step-by-step: find the right HSN code

List your products clearly - by common category name and material
Visit the CBIC HSN directory - cbic-gst.gov.in → HSN search
Search by keyword or description
Narrow by chapter - HSN is organised into 99 chapters
Match the 4-digit heading, then drill to 6 or 8 digits
Verify the GST rate against the CGST schedule
Lock it into your inventory system - never look it up again

Step-by-step: find the right SAC code

Identify the service category - IT, consulting, repair, transport, etc.
Visit the GST portal SAC directory
Match against Chapter 99 - all SACs start with 99
Pick the 6-digit SAC that matches your activity
Confirm the applicable GST rate (usually 18%)

Common HSN/SAC codes for popular businesses

Software services - 998314
Digital marketing - 998361
Management consulting - 998311
Ready-made garments - 6109, 6110
Mobile phones - 8517
Footwear under ₹1,000 - 6401
Restaurant services - 996331
Freight transport by road - 996791

Cost of wrong HSN selection

Show Cause Notice - adds 7+ days to registration
ITC reversal - immediate cash cost
Penalty up to ₹25,000 per incorrect invoice
Interest on tax shortfall - 18% per annum

Compare our GST registration for traders and GST registration for e-commerce for category-specific HSN help.

Common mistakes

Using a generic "miscellaneous" code - always rejected
Mixing HSN and SAC - services use SAC, goods use HSN
Copy-pasting from a competitor - their business activity may differ
Ignoring 8-digit requirement for exports
Not updating on rate revisions - HSN rates change with every council meeting

Frequently Asked Questions

Is HSN mandatory on all invoices?

Yes for B2B. Optional on B2C up to ₹5 crore turnover, but best practice to include it anyway.

What if my product fits two HSN codes?

Pick the more specific one. Generic codes invite audit queries.

Can I change my HSN later?

Yes. Update in GSTR-1 from the next return; amend the GST registration if the main activity changes.

Is SAC 998314 always 18%?

Most software services are 18%, but export of software is zero-rated with LUT filing.

Where do I find GST rates for each HSN?

CBIC publishes rate schedules. Cross-check every HSN against the current rate notification.

Does freelance work need an HSN or SAC?

Services use SAC. See GST registration for freelancers.

What happens at audit if HSN is wrong?

Officer reclassifies, recovers differential tax, and levies a penalty. Always document your choice.

What should you do next?

Getting HSN/SAC right once - and locking it into your invoicing system - prevents 90% of the classification disputes Indian businesses face. Spend 30 minutes at registration, not 30 days in notices later.

Get GST registration in 24 hours with expert support. Our CA team maps your activity to the correct HSN/SAC before submission. Start with GST registration or read the documents checklist.

What to verify before acting on HSN Code Finder Guide

Rules and platform behaviour change after an article is published. Confirm thresholds, registration status, return forms, document rules, and portal notices against the GST Portal before you act on anything below, because the right answer depends on your entity, state, turnover, and current setup.

Going deeper: GST Registration, GST Registration for Small Business, and GST Registration for E-commerce.

HSN Code Finder Guide: How to Pick the Right HSN/SAC for Your Business