The transport sector in India plays a significant role in the country’s economy, as it enables the movement of goods and people throughout the country. The industry is a significant contributor to India’s gross domestic product (GDP) and provides employment to a large number of people. This article provides a detailed list of HSN or Sac Codes for the transportation sector and its GST rates.

What Exactly Is the HSN Code?

HSN stands for “Harmonized System of Nomenclature.” It is a standardised system of names and numbers used to classify goods in international trade. The HSN code is a six-digit number that is used to identify the type of goods being traded. The HSN code is used to facilitate trade by helping to ensure that goods are correctly classified for customs purposes, and it is used by customs authorities around the world to determine the applicable duties and taxes on goods being imported or exported.

What Is the SAC Code?

SAC stands for “Services Accounting Code.” It is a standardised system of codes used to classify services in India for the purpose of determining the applicable goods and services tax (GST) rate. Like the HSN code, the Sac Code is a six-digit numeric code used to identify the type of service being provided. The SAC code ensures that services are correctly classified for GST purposes. It is used by the Indian tax authorities to determine the applicable GST rate on services being provided within India.

Structure of the HSN/SAC Code

The SAC code is a six-digit number used to classify services in India for the purpose of determining the applicable goods and services tax (GST) rate. The structure of the SAC code is as follows:

• The first two digits represent the “chapter” in which the service is classified. There are 99 chapters in the SAC code classification system, each covering a specific category of services.
• The next two digits represent the “heading” of the service. There are a total of 992 headings in the SAC code classification system, and each heading covers a specific subcategory of services within a chapter.
• The last two digits represent the “subheading” of the service. There are a total of 9989 subheadings in the SAC code classification system, and each subheading covers a specific type of service within a heading.

For example, if a service is classified as “SAC code 997219,” this means that it is classified in Chapter 99 (Other Services), Heading 9972 (Repairs), and Subheading 997219 (Repairs of Other Goods). The GST rate applicable to the service would be determined based on the classification of the service as indicated by the SAC code.

Importance of HSN/SAC codes

By using SAC codes, businesses and individuals providing services in India can accurately determine the GST rate applicable to their services, which helps them comply with tax laws and avoid any potential penalties for non-compliance. SAC codes also help to create consistency in classifying services for GST purposes, making it easier for businesses to understand and comply with the GST rules and regulations.

In addition, SAC codes can be used by the Indian tax authorities to track and monitor the GST paid on different types of services, which helps to ensure that businesses and individuals are accurately reporting their GST liability and paying the correct amount of tax.

HSN/SAC Codes for the Transport Sector

The table given below depicts the HSN and SAC codes for the transportation sector.

FAQs on HSN and SAC Codes

The following FAQs will give you a better understanding of HSN and SAC codes.

Who is required to quote the HSN/SAC code mandatorily?

• Taxpayers with aggregate turnover up to Rs. 5 crores in the preceding financial year are mandated to quote a four-digit HSN code in all their B2B invoices. However, it is optional for B2C invoices.
• Taxpayers with aggregate turnover above Rs. 5 crores in the preceding financial year are mandated to quote a 6-digit HSN or SAC code in all their B2B and B2C invoices.

What are the consequences of non-compliance?

If the invoice does not contain an HSN or SAC code or contains an incorrect code, then the invoice shall be invalid, and the buyer cannot claim an input tax credit based on that invoice. A penalty of Rs 50,000 can be levied for not mentioning or wrongly mentioning the HSN or SAC Code under Section 125 of the CGST Act.

What is the difference between HSN and SAC codes?

HSN and SAC codes are both standardised systems of codes used to classify goods and services, respectively, for the purpose of determining applicable duties, taxes, and other regulatory requirements. HSN codes are used to classify goods in international trade, while SAC codes are used to classify services in India.

Are HSN and SAC codes the same for all countries?

HSN codes are developed by the World Customs Organization. It is used to categorise goods, and it is similar in countries that are WCO members. However, some countries use an 8-digit code for a more detailed classification. HSN codes are used globally, while SAC codes are used only in India to classify services.

Why is the HSN/SAC code important?

By using SAC codes, businesses and individuals providing services in India can accurately determine the GST rate applicable to their services, which helps them comply with tax laws and avoid any potential penalties for non-compliance.

In today’s global economy, it is essential to know the correct classification of products or services to comply with various laws and regulations. I hope this article helped you find the correct HSN code for services related to the transportation sector.

Note: The above GST rates and HSN codes are subject to change as per government updates from time to time. Please visit the CBIC website for any clarifications regarding the “effective date” for every GST or Cess rate.

Read More:

• Income Tax Audit and To Whom Is It Applicable? – Documents to Keep Ready for Income Tax Audit
• Cost Plus Pricing Strategy: Definition, Advantages, and Disadvantages

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