Friday, 16 June 2017

CLASSIFICATION OF GOODS AND SERVICES UNDER GST

Classification 

As Different Rate of Tax (5,12,18,28) are Prescribed. Classification is Important to dermine proper rate of Tax.




Classification of Goods-
  •  Classification of Goods are done on the basis of  Harmonised System of Nomenclature (HSN) developed by World Customs Organisation.
  • HSN Tariff of goods is required to be indicated in Invoice and Return.
  • Tariff is Based on 8 Digit classification of goods. 
              First Two  -  Chapter No.
              Next Two - Heading
              Next Two - Sub-Heading 
              Last Two - For further Sub Classification
  •  Eight digit classification is termed as Tariff Item.
  • Classification is done on the basis of General Interpretative Rules (GIR) which is part of Tariff.
List of HSN Code for Goods
Rules of Interpretation of HSN for Goods- Following are the steps fo classification of a product as per Genereal Interpretative Rules (GIR) :-
Steps- Rules should by applied sequentially.
  • Titles of sections and chapters are only for reference.For Legal Purpose,refer the heading and sub-heading.Read corresponding Section notes and Chapter Notes. Section notes and Chapter notes have overriding effect.If there is no ambiguity or confusion , the classification if final. If clssification is not possible than go to next step.
  • If meaning of word is not clear, than refer Trade Parlance. This means trade the goods are to be classified as they are known in the trade and commerce i.e.meaning in its commercial sense.
  • Incomplete or unfinished goods having essential character of finished goods are classified under same heading as finished goods- Rule 2(a)
  • If ambiguity still persists,Specific description prevails over general description.-Rule 3(a)
  • If problem not resolved by above rule .i.e. 3(a)- Find which material or component is giving essential character to the goods.
  • If rule 3(a) and 3(b) are equally specific, find which comes last in the Tariff and select it- Rule 3(c).
  • If still unlble to find the goods in question for classification , find goods which are more "AKIN"-Rule 4. Akin means  Simillar or Idential Goods.
  • Packing Material is classified along with the goods except when the is for repetitive use.Rule 5

Classification of Services:-
There is no International Classification of Services similar to Harmonised System of Nomenclature (HSN) for Goods. All services have been clssified with 6 Digit code, having 9 broad sections.
First two digits are "99".Third digit is section No.These are classified in groups with five digit code.

Principles of classification of same as above.

List of Service Code

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