An established coding system used to characterise products is known as HS Code. The same HS codes are employed to categorise products all across the world.
In tax bills up until now, we have used a four-digit HS code; however, as of April 1, 2021, this requirement will change.
Taxpayers must now include their six-digit HSN code in the invoice if their revenue exceeds Rs. 5 crore. 4 digit HSN codes are applicable to taxpayers with annual revenue under Rs. 5 crore.
An essential element of a tax invoice is the HS code. Through the use of the HS code, the government is able to keep track of both incoming and outgoing materials, as well as determine the production and consumption of goods on a national scale.
Additionally, GST tax rates are based on HS codes, which make it easier to determine tax obligations at the server level and prevent pointless lawsuits.
Therefore, it is advised to update accounting systems with the six-digit HS code, as failure to do so could result in legal problems.
