HSN Code for Transport Charges

HSN code list for transport charges are important terms in Indian taxation systems. Learn what it is, its structure and why you need it.

HSN code for transport charges plays an important role in every supply chain and logistical venture. These charges consist of the costs associated with the movement of goods across various modes of transport, be it by road, rail, sea, or air.

In India, the Harmonized System of Nomenclature (HSN) serves as the classification system for goods and services that helps the taxation process. Each specific item is assigned a unique HSN code which serves as a key factor in determining the tax rate. In this blog, we will talk about HSN codes specifically related to transportation charges.

So, let’s get to it!

What is HSN Code?

HSN code or Harmonized System of Nomenclature was launched by the WCO (World Customs Organization) to classify goods or services for trade and taxation purposes. In the context of transportation, HSN codes for transport charges are used to identify and categorize different types of transportation services.

Classification of HSN Codes

HSN codes contain six digits, which indicate various classification levels of products. The breakdown of the HSN Code is as follows:

1. Chapter (First two digits): These initial digits represent the chapter. There are 99 chapters in the HSN Code. These chapters are further grouped into 21 sections based on the nature of goods.
2. Heading (Next two digits): The next two digits in the HSN Code specify the heading. There are 1,244 headings within the code.
3. Subheading (Last two digits): The final two digits in the HSN Code indicate the subheading. With over 5,244 sub-headings, the code allows for a more detailed classification of goods.

For example, let’s check the HSN Code for “Brown Rice” – 100620:

• The “10” signifies the chapter ‘cereals.’
• The “01” denotes the heading ‘rice’ within the cereals chapter.
• The “00” indicates the sub-heading ‘husked (brown) rice,’ which is a more detailed classification for the specific type of goods.

Why Do You Need HSN Code for Transportation Services?

In India, HSN was introduced in India by the Government of India in 2017 as a segment of the GST (Goods and Service Tax) system. HSN codes help businesses with accurate GST determination, streamline filings, invoice clarity, and more. Below are some key reasons why HSN for transport charges is important:

• Accurate Tax Calculation and Filings: HSN codes enable businesses to calculate the correct GST rates which depend on the specific transportation service. This can also help in efficient tax filing processes with simplified tax returns.
• Transparent Billing: HSN codes clearly indicate the nature of products or services rendered and their corresponding tax implications. This promotes clarity for both businesses and tax authorities.
• Gather Insights: The government uses HSN codes to gather valuable insights into the transportation sector that can help them in policy formulation, revenue tracking, and industry performance tracking.
• Better Harmonized Classification: HSN codes align with international standards and promote seamless cross-border trade through consistent classification of goods and services. This helps in customs clearance processes and in reducing trade barriers.

HSN Codes for Transportation Charges

The HSN code for transport charges differs every time depending on the transportation mode used to supply goods. Below are the HSN for transportation charges:

• HSN Code 9967 (Road Transport Services): This category includes services for transporting goods, passengers, and providing courier services via road.
• HSN Code 996711 (Rail Transport Services): This classification encompasses services related to the transportation of goods and passengers by rail.
• HSN Code 996712 (Air Transport Services): This code covers services associated with transporting goods and passengers by air.
• HSN Code 996713 (Water Transport Services): This category includes services related to transporting goods and passengers by water.

It’s important to know that these HSN codes for transport services are provided by companies that help with delivering stuff (like a courier service). If a company offers delivery services as part of its business, the code used depends on what kind of business it is.

For example, if a company mostly sells things, then the code for the goods they sell is used for the delivery charges too.

Conclusion

Transport charges HSN code is crucial for effective logistics and supply chain management in India. It serves as a standardized classification system for transportation services, which ensures that businesses comply with tax regulations and manage their supply chains efficiently.

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