Relevance of GST HSN Codes for Indirect Tax Implementation in India: A Review

Goods and Service Tax (GST) replacing existing indirect taxes, central value added tax and state value added tax, in July 2017 is an epoch in Indian tax reforms. However, the success of GST implementation depends a lot on how it is designed, so as to decipher it easily. Therefore, the purpose of this paper is to study the HSN Codes and their usage under GST so as to add to the existing literature about their need and importance. Since, the devil lies in the details because of the teething troubles associated with GST implementation. One such teething trouble is identifying one's business operations with the exact harmonised system of nomenclature (HSN) code under the GST law. The list of these codes is very elaborate, and as the tax to be levied on an entity depends upon the HSN code under which the entity is registered for GST, it is all the more essential to understand and identify these codes correctly with one's business. Hence, it is important to approach the topic by reviewing the existing information/literature and data sources in order to understand the relevance of HSN codes in the newly introduced indirect tax collection system in India. India by adopting HSN classification for implementation of GST, will gain recognition and acceptance from countries around the world that have already adopted and implemented it. Thus usage of HSN codes will not just simplify trade but will also make this new GST regime globally harmonised. The paper contributes to the existing literature on GST implementation in India.