Library / Goods and Services Tax: The Professional's Master Guide

Appendix N: HSN and SAC Quick Guide

Goods are classified under the Harmonised System of Nomenclature (HSN) as adopted in the Customs Tariff: 21 sections and 98 chapters, with headings (4 digits), sub-headings (6 digits) and tariff items (8 digits). Services use the Services Accounting Code (SAC), all within chapter 99. Rate notifications refer to these codes, so the classification decides the rate.

Where AATO is above Rs. 5 crore, invoices and GSTR-1 must show HSN codes at 6 digits for all supplies. Where AATO is up to Rs. 5 crore, 4 digits are mandatory on B2B invoices and optional on B2C invoices. From the February 2025 return period, Table 12 of GSTR-1 (the HSN summary) is reported in separate B2B and B2C tabs, with the code picked from a drop-down list.

Common SAC groups are listed below.

SAC heading	Services
9954	Construction services, including works contracts
9963	Accommodation, food and beverage services
9964, 9965	Passenger transport; goods transport (including GTA)
9967	Supporting transport services (cargo handling, storage)
9971	Financial and related services
9972, 9973	Real estate services; leasing or rental without operator
9982, 9983	Legal and accounting; other professional and technical services
9985	Support services (manpower, security, cleaning)
9988	Manufacturing services on inputs owned by others (job work)
9992, 9993	Education; health services
9996, 9997	Recreation and sporting; other services (beauty, wellness)

Key point

Classify using the General Rules for Interpretation of the tariff, section and chapter notes, and the HSN Explanatory Notes. Common parlance helps where the tariff is silent (Dunlop India, Supreme Court, 1976). The burden of proving a classification different from the one adopted by the taxpayer lies on the revenue (HPL Chemicals, Supreme Court, 2006), but exemption entries are read strictly against the claimant (Dilip Kumar and Co., Supreme Court, 2018).