HSN Code and GST Rate: How to Set Them Up for Your Items (and in BizBahi)

Updated: 29 October 2026

Every item on a GST bill needs two things: an HSN code (SAC for services) that says what the item is, and the GST rate that applies to it. Get them right once on each product, and every bill, the HSN-wise tax summary and your GSTR-1 data come out right by themselves. This guide explains how to find the code and rate for an item, what changed in the GST rates from 22 September 2025, and how to set both up in BizBahi.

Seedhi baat: har product par ek baar sahi HSN code aur GST % bharo. Uske baad bill, tax summary aur GSTR-1 ka HSN data apne aap sahi banega. For what else a bill must show, see the GST invoice format guide.

What HSN and SAC codes are

HSN (Harmonized System of Nomenclature) is a numbering system for goods. The first 2 digits are the chapter, 4 digits the heading, 6 digits the sub-heading, and India adds 2 more digits for an 8-digit tariff item. For example, chapter 85 is electrical machinery and heading 8544 is insulated wires and cables.

SAC (Services Accounting Code) does the same job for services. SAC codes are 6 digits and start with 99, for example 998314 for IT design and development services, or 998719 for repair of other goods.

How many digits you need on a bill

Turnover up to ₹5 crore in the last financial year: a 4-digit HSN code is mandatory on B2B bills (buyer with GSTIN). On B2C bills it is optional.
Turnover above ₹5 crore: a 6-digit HSN code on all tax invoices.
E-way bills and e-invoices need a valid HSN code for every item, even when your bill could skip it.

Many shops simply enter the 8-digit code their supplier prints on the purchase bill. That is always enough. More digits are fine, fewer than required are not.

How to find the right HSN code and GST rate for an item

Check your supplier's purchase bill first. Most registered suppliers print the HSN code and GST rate on it, and for goods you resell this is usually the quickest starting point.
Use the official HSN / SAC search on the GST portal (gst.gov.in) to look up the item by name or code.
Confirm the rate in the current CBIC GST rate notifications or the GST rates pages on cbic-gst.gov.in, because the same chapter can have items at different rates.
If an item could fit two headings (for example a gift set with mixed items, or a part that is also sold as an accessory), ask your CA. A wrong code usually means a wrong rate, and that is what tax officers look at.

GST rates from 22 September 2025: 5% and 18% are the main slabs

On the recommendation of the 56th GST Council meeting, the general 12% and 28% slabs were removed from 22 September 2025. Many goods that were at 12% moved to 5%, and most that were at 28% (for example TVs, ACs, cement and small cars) moved to 18%. Some everyday items became nil-rated.

A 40% rate now applies to specified luxury and "sin" goods such as pan masala, aerated drinks and high-end cars. A few special rates remain, such as 3% for gold, silver and jewellery. Cigarettes, chewing tobacco, unmanufactured tobacco and bidi were kept on their old GST and compensation cess rates for a while and move to the new rates on a separate date notified by the government.

GST rate structure for goods after 22 September 2025 (summary)
Rate	Used for
Nil / exempt	Many unbranded essentials and fresh food, plus items exempted in the 2025 changes
5%	Essentials and most items that were earlier at 12%
18%	The standard rate for most goods, including most that were earlier at 28%
40%	Specified luxury and sin goods (for example pan masala, aerated drinks, high-end cars)
3%	Gold, silver and jewellery

Scroll sideways to see all columns.

Summary of CBIC Notification No. 9/2025-Integrated Tax (Rate) dated 17 September 2025 and the GST Council press release of 3 September 2025. The rate of a specific item depends on its exact HSN entry, so always check the notification or your CA.

Set up HSN and GST % on a product in BizBahi

Open Products & Services and tap the + (Add product) button, or open an existing product and tap Edit.
Choose the item type: Goods (stock tracked, HSN) or Service (no stock, SAC).
Type the HSN code (goods) or SAC code (services). BizBahi accepts 4 to 8 digits and shows an error if the code has letters or the wrong length.
Enter the GST %. New products start at 18%; change it to 0, 5, 40 or whatever rate applies to that item.
Enter the selling price without GST. BizBahi adds GST on top of the selling price on the bill, after any discount.
Save. From now on, every bill with this product picks up its HSN code and GST % automatically.

Have many products? Fill the products template (it has HSN and GSTPercent columns) and import it from More → Integrations → Excel import/export. Matching SKUs are updated, new ones are added. On the free plan, new products from an import count toward the free product limit.

What happens when a GST rate changes

Each bill line keeps the GST % it was saved with. So when you edit a product's GST % after a rate change, only new bills use the new rate; your old bills and their tax figures stay exactly as they were issued. Update the rate on each affected product (or re-import the products sheet with the new GSTPercent) on the day the new rate starts.

Under Section 14 of the CGST Act, if the goods were supplied before a rate change but the invoice is issued or payment is received after it, the rate that applies depends on which two of the three events (supply, invoice, payment) happened before the change. For such boundary cases, check with your CA before billing.

Where your HSN codes show up

On the printed bill, in the HSN / SAC column and the HSN-wise tax summary below the items (both can be turned on or off in the print settings).
In the GSTR-1 / GSTR-3B export (paid plans and the 7-day trial for new accounts): the HSN summary is split into B2B and B2C sheets, grouped by HSN code, unit and GST rate. BizBahi warns you if any bill line has no HSN or SAC code.
In the e-way bill and e-Invoice JSON export, which will not create a file until every item has a 4, 6 or 8 digit code, and checks that service codes start with 99 and goods codes do not. See the e-way bill and e-Invoice JSON guide.
When you scan a purchase bill, BizBahi uses the HSN code as one of the hints to match the supplier's item to your product.

Common mistakes to avoid

Leaving the GST % at the default 18% for items that are actually at 5% or nil.
Typing a service code (starting with 99) on goods, or a goods HSN on a service like repair or installation charges.
Not updating product rates after a GST rate change, so new bills keep charging the old rate.
Using one HSN code for everything in the shop. Different items usually have different codes and often different rates.

Frequently asked questions

Is HSN code mandatory on a GST bill for a small shop?

If your turnover in the last financial year was up to ₹5 crore, a 4-digit HSN code is mandatory on B2B bills and optional on B2C bills. Above ₹5 crore, a 6-digit code is needed on all tax invoices. E-way bills and e-invoices always need it.

Where can I find the HSN code of a product?

Start with your supplier's purchase bill, which usually shows it. You can also search by name on the GST portal's HSN / SAC search and confirm the rate in the CBIC rate notifications.

Are 12% and 28% GST rates still used?

From 22 September 2025, the general 12% and 28% slabs were removed and most goods moved to 5% or 18%. Some tobacco products stayed on old rates until a separately notified date, so check the current notification for those.

If I change a product's GST rate in BizBahi, do old bills change?

No. Each bill line keeps the rate it was saved with. Only bills made after you change the product use the new GST %.

What is the difference between HSN and SAC?

HSN codes classify goods and SAC codes classify services. SAC codes start with 99. In BizBahi, choose Goods or Service on the product and the code field changes to HSN or SAC.

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