Syllabus Section – Economy

Why in News?

The government has made it mandatory to mention 8-digit HSN or tariff code for 49 chemical based products while issuing Goods and Services Tax (GST) invoice, a move experts feel is aimed at curbing tax evasion.

About:

• Harmonised System, or simply ‘HS’ .It is a six-digit identification code.

•  Of the six digits, the first two denote the HS Chapter, the next two give the HS heading, and the last two give the HS subheading.

• It is Developed by the World Customs Organization (WCO).

• Called the “universal economic language” for goods.

• It is a multipurpose international product nomenclature.

• The system currently comprises of around 5,000 commodity groups.

Application:

HSN classification is widely used for taxation purposes by helping to identify the rate of tax applicable to a specific product in a country that is under review. It can also be used in calculations that involve claiming benefits.

Significance:

• Over 200 countries use the system as a basis for their customs tariffs, gathering international trade statistics, making trade policies, and for monitoring goods.

• The system helps in harmonising of customs and trade procedures, thus reducing costs in international trade.

 

Source – Economic times