India-based Sellers: How do I add a HSN / SAC number to my invoice and select the GST tax rate accordingly?
HSN (Harmonized System Nomenclature) is part of an international system nomenclature used for classifying goods. HSN is a six-digit code that classifies more than 5000 products, and is widely used for taxation purposes in order to identify the right type or rate of tax that is applicable to a specific product.
SAC (Services Accounting Code) works in the same way as the HSN code, but is used for services ordered instead of goods.
HSN helps in identification of GST Rates applicable to goods, while SAC helps identify GST Rates applicable to services. The goods and services tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption.
In India, the following conditions apply from 1 April 2021:
- Businesses with a turnover of up to 5 crore need to include a 4-digit HSN / SAC code, mandatory for B2B tax invoices and optional for B2C tax invoices
- Business with a turnover of more than 5 crore need to include a 6-digit HSN / SAC code, mandatory on all invoices
You can find more information on HSN / SAC codes and GST on the Central Board of Indirect Taxes & Customs of the Government of India official website. You can find out what HSN / SAC code applies to your invoice, as well as the appropriate GST tax rates for it, on the GST portal.
Both the GST and the HSN / SAC code need to be added to your invoice on Tradeshift. In the Create app, you can add a HSN / SAC code for each line item by clicking on the Plus sign (1) at line level (it becomes a - once you've clicked on it, just like in the screenshot below), after which the Add optional field (2) will appear. Select the HSN / SAC (3) option from the dropdown list. Choose the one that is applicable and add your number in the text box on the right.
According to your HSN / SAC number, you can then go on to select the appropriate GST tax rate at line level. A tax rate might already be pre-filled based on this in the Tax (1) field, but if that’s not correct, you can also manually select a tax rate.
Click within the Tax (1) rate field to manually change the tax rate. A side panel will appear with the most common taxes that are applicable in the country that you are based in - in this case, India. Scroll down and click on the appropriate tax to select it.
Now you've successfully added your HSN / SAC code and the appropriate GST tax rate to the invoice. Keep adding details to your document based on your Buyer's requirements, which are detailed in their Validation Rules.
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