What is an HSN code and why is it important for your business?

The World Customs Organization (WCO) introduced HSN codes (also known as HS codes) in 1988. Over 200 countries now use this classification system to categorize more than 5,000 commodity groups for international shipping.

What are HSN codes?

HSN (Harmonised System of Nomenclature) codes are six-digit identification codes used to categorize goods in international trade. They provide goods and commodities with a unique classification ID to show customs authorities exactly what is being shipped. 

This globally recognized coding system makes it easier to identify goods and apply the appropriate fees and taxes in the importing country. Universal HSN codes are designed to improve speed and efficiency for exporting and importing goods worldwide.

The importance of HSN codes in international trade 

The correct HSN code is necessary for legal and commercial documents issued by exporters and importers. Almost every nation requires HSN codes on trade documents such as bills of lading and letters of credit. The unique six-digit code classifies an item by its category and product type. 

HSN codes also help you with the customs duty for your goods. Learn more: Customs duty explained, key types, and how to calculate it.

HSN code structure and examples

Understanding HSN trading codes can seem complex at first. But to make it easier, you can break the six digits into three sets of two-digit combinations.

First, it's important to understand some WCO terms related to how goods are categorized:

• Sections: Product groups, and the WCO lists 21 on its website. The Section does not form part of the HSN code
• Chapters: Categories of products that sit under the sections. There are 99 of these in total
• Headings: Subcategories of products that fall under chapters. There are 1,244 headings in total
• Subheadings: These refer to the products themselves. The WCO lists 5,244 of these 

Any six-digit HSN code combination tells the customs authority the chapter, heading, and subheading of any WCO-listed product:

1. The first two digits represent the chapter
2. The middle two digits represent the heading
3. The final two digits represent the subheading

Here is an example of the HSN code for brown rice.

• Section II - Vegetable Products
• Chapter 10 - Cereals
• Heading 06 - Rice
• Sub-heading 20 - Husked (brown) rice

So the HSN code for brown rice is (100620).

Are HSN codes the same in every country?

While HSN codes strive for global uniformity in classifying traded goods, they aren’t exactly the same in every country. The initial six digits are indeed consistent across most nations. But many countries, like the US, China, and India, add their digits to create longer, country-specific HSN codes.

These additional digits allow for finer product distinctions and address each country's unique tariff and statistical requirements. Take a look at a few examples:

• India: 8-digit HSN code, building upon the 6-digit foundation for tax purposes
• United States: 10-digit Harmonized Tariff Schedule (HTS) code
• China: 13-digit code for customs procedures and detailed classification
• Australia: 8-digit Customs Tariff or Working Tariff code
• United Kingdom: 10-digit UK Global Tariff (UKGT)
• European Union: 10-digit TARIC code (Integrated Tariff of the European Union) 

Key considerations with HSN codes

HSN codes are designed to classify goods for customs tariffs and taxation purposes. Exporters must apply the correct code for each product to avoid complications, such as:

• Shipping delays
• Overpaying or underpaying on customs fees
• Fines
• Having goods seized

Companies should ensure they avoid any errors by placing the correct, up-to-date HSN code on all shipping documents. If you're an exporter regularly shipping specific goods, keeping a record of the code(s) you need lowers the risk of errors when producing new shipping documents. 

You also need to stay up-to-date with news from the WCO because they review the classification system every few years. This could include changes to the HSN code system and structure.

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Frequently Asked Questions (FAQ)

HSN code search: How do I find my HSN code?

You can find the global HSN code for any product online. Start by understanding your product's characteristics and consulting the WCO HSN webpage. Then, if you want, refine your search using country-specific resources like the USITC website for the USA.

• USA: Use the official HTS searcher of the United States
• India: The Indian government's GST website offers a search function so users can enter a description of their items to find the correct code
• UK: To search for a UKGT, use the commodity code searcher by the official UK customs
• Canada: Find the code through the Canadian Importers Database (CID)

Are the HSN and HTS codes the same?

HSN and HTS codes are similar and often used interchangeably, but they aren’t the same. Harmonized Tariff Schedule (HTS) codes are extensions for the U.S. These codes use the first six digits of the HSN code plus additional digits (up to four) to determine tariffs and import classifications.

What about SAC HSN codes?

Similar to HSN codes, Services Accounting Codes (SAC) provide a classification function for services instead of goods. SAC codes also consist of six digits which classify specific services and categories. 

Below is an example of the SAC code for web development services:

• Chapter 99 - Business services
• Heading 83 - Other professional, technical, and business services
• Sub-heading 14 - Information technology (IT) design and development services
• SAC HSN Code: 998314

What is the latest version of the HSN code?

The WCO updates the HSN code system every 5 – 6 years to adapt to the evolving needs of global supply chains. In January 2022, the WCO posted its 7th edition of the Harmonised System.

Hopefully, this quick guide has answered your questions about HSN codes and their uses. It's clear to see how important they are in international trade.

We recommend you always double-check whether the code you use on your shipping documentation is correct and up-to-date.