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All you need to know about HS code to
export from India
The Harmonized System (HS) code is a standardized numerical method to classify export trade products by customs authorities around the world. Administrated by the World Customs Organization (WCO), this code is important for exports. In this blog, understand the advantages of HS code and process to obtain it.
Across the world, millions of products are exported every day from one port to the other across a range of categories like leather, jewellery, spices, apparel and more. With so many exporters involved in the trade, a coding system was introduced to ensure smooth import-export between countries. Irrespective of the origin or destination country and the product being sold, the code helps standardize and identify products in an easy manner. This is the Harmonized Commodity Description and Coding System or commonly called the HS Code.
What is an HS code?
Developed and managed by the World Customs Organization (WCO), HS code is known as HSN code (Harmonized System of Nomenclature) in India. HSN coding is currently used under Excise, Customs, and state Value Added Tax (VAT) laws. Comprising more than 5,000 commodity groups, the internationally recognized nomenclature identifies each product with a unique 6-digit code, defined by laws, to regulate uniformity across the world. The system is used by more than 200 countries to decide the customs tariffs and create trade statistics. More than 98% of the trading merchandise is classified under the Harmonized System1.
The HS code interprets product information and allows both exporter and importer to avoid any interruption during goods exchange. It also helps in categorizing goods to collect proper internal as well as external taxes at the customs clearance.
Not applying an HS code or assigning an improper HS code to your products might affect calculating standard duty rates and fines for not following trade norms. The absence of an HS code might also lead to inability to identify the shipment correctly.
The HS code interprets product information and allows both exporter and importer to avoid any interruption during goods exchange. It also helps in categorizing goods to collect proper internal as well as external taxes at the customs clearance.
Not applying an HS code or assigning an improper HS code to your products might affect calculating standard duty rates and fines for not following trade norms. The absence of an HS code might also lead to inability to identify the shipment correctly.
Features of HS Code
Some of the key features of HS codes are1:
• It comprises more than 5000 commodity groups.
• HS codes are identified by a 6-digit code arranged in a legal and logical structure.
• It acts as a uniform standard for the classification of goods.
• This system is used by more than 200 countries and economies as a basis for their customs tariffs.
• Over 98% of the products in international trade are classified in terms of HS codes.
• It comprises more than 5000 commodity groups.
• HS codes are identified by a 6-digit code arranged in a legal and logical structure.
• It acts as a uniform standard for the classification of goods.
• This system is used by more than 200 countries and economies as a basis for their customs tariffs.
• Over 98% of the products in international trade are classified in terms of HS codes.
Uses of HS code
HS codes are used for:
• Import and export tariff rates specific to the product category
• Analysis and collection of international trade data
• Calculation of internal taxes and liabilities to be paid
• Import and export tariff rates specific to the product category
• Analysis and collection of international trade data
• Calculation of internal taxes and liabilities to be paid
Structure and classification of HS code in India
According to WCO, the length of an HS code should be six digits. However, additional digits can be added as per further classification codes of a particular country. For instance, USA uses 10-digit HS code, where the first six digits are given by the WCO (World Customs Organization) and additional numbers are allotted by the US customs authority, called Harmonised Tariff Schedule (HTS) numbers2.
In India, an 8-digit HSN code is used, in which the first six digits are given by WCO and two other digits are additional. The HSN codes are further classified into 21 sections, 99 chapters and each chapter defines a specific product category – heading, subheading and tariff item3.
So, in the 8-digit ITC (HS) code, the first two digits indicate the chapter, the next two represent the heading, the next two represent subheadings and the last two are the tariff item numbers.
Let’s consider this example (only for reference):
The HSN code is 090111112.
09- Tea, Coffee and spices ()
0901- Tea, green tea or blue tea
090111- Green Tea that is not caffeinated
09011112- Green Tea that is not caffeinated grade B
So, 090111 is an international part of the HS code and “12” is added in India. This 8-digit code is known as ITC (HS) code/Indian Trade Classification/ Indian Tariff Code. These ITC (HS) codes are developed and maintained by the Directorate General Of Foreign Trade in India.
In India, an 8-digit HSN code is used, in which the first six digits are given by WCO and two other digits are additional. The HSN codes are further classified into 21 sections, 99 chapters and each chapter defines a specific product category – heading, subheading and tariff item3.
So, in the 8-digit ITC (HS) code, the first two digits indicate the chapter, the next two represent the heading, the next two represent subheadings and the last two are the tariff item numbers.
Let’s consider this example (only for reference):
The HSN code is 090111112.
09- Tea, Coffee and spices ()
0901- Tea, green tea or blue tea
090111- Green Tea that is not caffeinated
09011112- Green Tea that is not caffeinated grade B
So, 090111 is an international part of the HS code and “12” is added in India. This 8-digit code is known as ITC (HS) code/Indian Trade Classification/ Indian Tariff Code. These ITC (HS) codes are developed and maintained by the Directorate General Of Foreign Trade in India.
Importance and uses of HS Code
HS codes are used for:
• Import and export tariff rates, specific to the product category
• Analysis and collection of international trade data
• Calculation of internal taxes and liabilities to be paid
This is why HS codes are important for international trade:
• Import and export tariff rates, specific to the product category
• Analysis and collection of international trade data
• Calculation of internal taxes and liabilities to be paid
This is why HS codes are important for international trade:
Keeps a track of tariffs and taxes:
These codes are used by customs authorities to apply tariffs and taxes on goods and keep a track of exports and imports.
Aids in customs clearance:
Goods can be sorted and arranged in an overall structure, which helps in smooth customs clearance process.
No more catalog confusion:
Product information can be easily interpreted and both the parties (importer and exporter) can avoid unwanted catalog-based confusion caused during exchange.
How to find the right HS code for your product?
You can easily find the ITC (HS) code for your product, so you can export easily.
a) Open the DGFT website
b) Search the list provided by the Ministry of Commerce
c) Once the latest list opens, search for the relevant chapter
d) Check for correct heading, subheading and tariff item
e) Get the right HS code for your product.
a) Open the DGFT website
b) Search the list provided by the Ministry of Commerce
c) Once the latest list opens, search for the relevant chapter
d) Check for correct heading, subheading and tariff item
e) Get the right HS code for your product.
Consequences of incorrect usage of HS Code
In case a product is classified incorrectly due to improper usage of HS Code, it can lead to border delays, seizure of products, non-compliance penalties or sometimes even denial of import privileges.
HS Code under GST in India
HSN code is required for all import and export trade transactions. However, this code has a set of exceptions too:
1. If turnover is less than INR 1.5 crores, no HSN code is required.
2. If total turnover is between INR 1.5 crores to INR 5 crores, a two-digit HSN code is required
3. If total turnover is more than INR 5 crores, a four- digit HSN code is required.
4. For Import and export trading, an eight-digit HSN code is mandatory.
1. If turnover is less than INR 1.5 crores, no HSN code is required.
2. If total turnover is between INR 1.5 crores to INR 5 crores, a two-digit HSN code is required
3. If total turnover is more than INR 5 crores, a four- digit HSN code is required.
4. For Import and export trading, an eight-digit HSN code is mandatory.
How to export from India?
Once you’ve obtained necessary documents to meet compliance and regulatory requirements, you can export from India in a seamless manner with e-commerce export programs like Amazon Global Selling. With millions of customers internationally, sellers from any part of India can export using Amazon’s easy registration, simple product listing and hassle-free shipping tools. The growing customer base on 18 Amazon international marketplaces including Amazon USA, UK, Australia, UAE and Singapore, among others, will enable you expand to your business to the world. Whether you have a locally recognized store, a startup brand or an offline exports business, you can reach new customers and international markets with Amazon Global Selling:
Register your business
First, you must register your export business with Amazon Global Selling. You don’t have to be an existing Amazon India seller. The registration can be done online on Seller Central. You’ll need the following documents to register:
• ID proof (Aadhar, driving license or passport)
• Business address proof (Bank statement)
• Credit or debit card (international transaction enabled)
• ID proof (Aadhar, driving license or passport)
• Business address proof (Bank statement)
• Credit or debit card (international transaction enabled)
To export from India, you require certain documents and licenses depending on
your product category and destination country.
your product category and destination country.
List your products
Once you have successfully registered to sell globally on Amazon, you can list your products. Remember to follow tips on how to list your products include attractive pictures and descriptions that’s clear to international customers. You can also seek help from third party service providers.
Ship and receive payments
Once a customer places an order, you can choose to deliver by yourself or you can opt for Fulfillment by Amazon (FBA). Under FBA, Amazon takes care of shipping, delivery, returns and customer concerns. Once a customer purchases your product, Amazon credits the money in your bank account in the currency of your choice.
Frequently Asked Questions
Why is HS code required?
If your products are being exported, it is important to have the respective HS code that is accepted internationally. Apart from being a regulation by WCO, HS code also makes it easy to store, ship and continue with customs formalities hassle-free.
Is HS code different in each country?
The first 6 digits of the HS code are universally same for all the countries. However, additional digits are added by different countries as per their national code systems. For instance, India has an 8-digit HSN code, while the US has a 10-digit HS code. In both cases, the first 6 digits remain common for the same product.
Is HS Code of 10-digits?
The US HS code is 10 digits and in India, an HSN code consists of 8 digits.
Do I need to mention HS Code in my export invoice?
It is mandatory to mention HS code in all shipping documents like commercial invoice, shipping bill and packing list.
Do all businesses need to get an HS Code?
Businesses that are registered in GST require an HS code. However, there are certain exceptions:
1. If turnover is less than INR 1.5 crores, no HSN code is required.
2. If total turnover is between INR 1.5 crores to INR 5 crores, a two-digit HSN code is required
3. If total turnover is more than INR 5 crores, a four- digit HSN code is required.
4. For Import and export trading, an eight-digit HSN code is mandatory.
1. If turnover is less than INR 1.5 crores, no HSN code is required.
2. If total turnover is between INR 1.5 crores to INR 5 crores, a two-digit HSN code is required
3. If total turnover is more than INR 5 crores, a four- digit HSN code is required.
4. For Import and export trading, an eight-digit HSN code is mandatory.
Who provides HSN codes?
The Harmonized System Code, or simply ‘HS code’, is the international product nomenclature developed by the World Customs Organization (WCO).
Published on December 27, 2021.
Sources:
1. http://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx
2. https://help.cbp.gov/s/article/Article-236?language=en_US
3. https://www.dgft.gov.in/CP/?opt=itchs-import-export
Sources:
1. http://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx
2. https://help.cbp.gov/s/article/Article-236?language=en_US
3. https://www.dgft.gov.in/CP/?opt=itchs-import-export
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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
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