1. HSN (Harmonized System of Nomenclature):
A business might be required to quote 2-digit HSN, 4-digit HSN or an 8-digit HSN (mandatory for exports) depending on the turnover of your business. It was developed by the World’s Customs Organization (WCO) in order to classify goods (products) from all over the world in a systematic way. Adopted in over 200 + countries, it covers around 98% of all goods produced and traded-in in the world.
- If the Business turnover is less than 1.5 crore, it does not require to quote HSN code in the invoice.
- If the Business turnover is between 1.5 crore and 5 crore, it is supposed to quote a 2-digit HSN code in the invoice.
- If the Business turnover is equal to or greater than 5 crore, it is supposed to quote a 4-digit HSN code in the invoice.
- In case of exports, an 8-digit HSN code is required to be quoted in the invoice.
Small businesses registered under composition scheme is not required to quote HSN in the bills.
Examples : HSN Code for Chocolate is 1704, which is a 4 letter code with a GST Rate of 0
2. SAC (Service Accounting Code):

Services Accounting Code (SAC) is a system used for classification of services developed by the Service Tax Department of India. When it comes to being under GST the majority of the dealers will need to use two- four or eight digit HSN codes for their services, depending on their turnover of the previous year.
- Business with turnover less than 1.5 crores is not required to quote SAC codes for their Services.
- Business with turnover between Rs. 1.5 crores and Rs 5 crores shall be required to use two digit SAC codes for their Services.
- Business with turnover of 5 crores and above is required to quote 4 digit SAC codes.
In case of imports and exports, the SAC codes will be 8 digits. - The small business registered under composition scheme is not required to mention SAC codes in their bills.
Example : SAC Code for Accounting Services is 9982 with a GST Rate of 18%
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