HSN and SAC Codes Under GST: How to Find the Right Code (and Why the Wrong One Costs You)

A wrong digit on your invoice can mean the wrong tax rate, a rejected e-invoice, or ITC denied to the buyer — here’s how the classification actually works

Published: September 11, 2026 · Last updated: September 11, 2026

Every good and service under GST is classified against a code before a tax rate can even be applied to it — HSN for goods, SAC for services. Get the code wrong and everything downstream is wrong too: the rate charged, the amount collected, the invoice’s validity, and whether your buyer can claim input tax credit on it at all.

HSN vs. SAC: What’s the Difference

HSN (Harmonized System of Nomenclature) is an internationally standardised numeric code for classifying goods, originally built for customs and international trade and adopted into India’s GST system for the same purpose. SAC (Services Accounting Code) is India’s own equivalent for services, maintained separately since services don’t move across customs borders the way goods do. Both ultimately decide which GST rate slab a transaction falls into.

How Many Digits You Actually Need

The digit requirement scales with your turnover, and it’s not optional above the threshold:

Aggregate Annual Turnover	HSN digits required
Up to ₹5 crore	4-digit (mandatory on B2B invoices; optional on B2C)
Above ₹5 crore	6-digit (mandatory on all invoices, B2B and B2C)

CBIC has also progressively made 6-digit HSN reporting mandatory in Table 12 of GSTR-1 for businesses above the threshold, and validation at the e-invoice/IRP stage checks the code format — an invoice with a malformed or missing HSN can fail e-invoice generation outright for businesses covered by the e-invoicing mandate.

How to Find the Correct Code

Use the official GST portal’s HSN/SAC search tool (under Services → User Services on the GST portal) — search by product description or code to see the government’s own classification.
Check the CBIC Customs Tariff schedule for goods, which is the underlying legal basis HSN codes are drawn from — useful when a product doesn’t match an obvious description.
Classify by what the product is, not what it’s called in trade. Classification follows the item’s essential character and composition under the Customs Tariff’s General Rules of Interpretation, not the commercial name it’s sold under — this is exactly the kind of dispute that has generated real litigation in India (the “papad vs. fryums” and similar snack-classification cases are the well-known examples).
When in doubt on a genuinely ambiguous product, apply for an Advance Ruling from your state’s Authority for Advance Ruling (AAR) rather than guessing — a wrong self-classification carries real financial risk if caught later.

Common Codes for Reference

Product / Service	Code	Typical GST rate
Mobile phones	HSN 8517	18%
Restaurant services (non-AC / standalone)	SAC 9963	5% (no ITC) or 18% (with ITC, per outlet type)
Goods Transport Agency (GTA) services	SAC 9965	5% (no ITC) or 12% (with ITC)
IT / software services	SAC 9983	18%
Works contract services	SAC 9954	18% (varies by contract type)
Textiles and apparel	HSN Chapter 61-63	5% below threshold value, higher above — check current slab

Rates against specific codes shift when the underlying slab structure changes — several categories moved when GST 2.0 collapsed the old four-slab system into three tiers in September 2025, so treat the table above as a starting point for lookup, and confirm the current rate on the GST calculator or the portal before invoicing.

What Goes Wrong When Classification Is Wrong

Wrong rate charged — undercharging creates a tax shortfall liability (plus interest and penalty) for the seller; overcharging just makes you less competitive and creates refund headaches for the buyer.
ITC denied to your buyer — if your invoice’s HSN/SAC doesn’t match the rate charged, or fails portal validation, it can hold up your buyer’s input tax credit claim on that purchase, which is a fast way to lose repeat business.
E-invoice rejection — malformed codes are one of the more common reasons an IRN generation request bounces back at the portal stage.
Scrutiny exposure — systematic misclassification across many invoices is exactly the pattern GST department data analytics is built to flag.

Quick Questions

Do small businesses need to mention HSN codes at all?
If your turnover is up to ₹5 crore, 4-digit HSN is mandatory on B2B invoices; it’s optional (but still recommended) on B2C invoices below that threshold.

Where do I find SAC codes specifically for services?
The GST portal’s search tool covers both HSN and SAC under the same lookup; SAC codes generally begin with “99” followed by digits identifying the service category.

Can two businesses classify the same product under different HSN codes?
Not legitimately — the classification follows the product’s essential characteristics under the Customs Tariff, not seller preference. Genuine ambiguity should go to an Advance Ruling, not be resolved by guessing differently each time.

Does the HSN code ever change for the same product?
The code itself rarely changes, but the GST rate applied to that code can — as happened broadly during the GST 2.0 rate restructuring.

HSN and SAC codes aren’t paperwork for its own sake — they’re the mechanism that determines the rate on every single invoice you issue. Getting classification right once, and rechecking it whenever rates shift, is far cheaper than untangling a scrutiny notice built on months of misclassified invoices.