HS code stands for harmonized system code. This was developed by the world customs organization in 1988 as a global trade nomenclature that describes the type of products to be shipped. It is used in more than 200 countries. Every custom officer in these 200 nations must use the harmonized code to clear each commodity whether entering or leaving any country's border.
The HS code is a 6 digits identification code. There are about 5000 products grouped globally under this code.
The six digits HS code is structured as follows-
· The first 2 digits indicate the chapter of the list
· Further 2 digits of the code are for the product's category
· The last 2 digits specify the commodity
Since 1988 the HS code has revised 5 times in 1996, 2002, 2007, 2012 and 2017. The current version of the harmonized code became effective on 1st January 2017.
The HS codes 01 to 98 indicate 98 chapters in the list. Each chapter specifies the category of the commodity/product. The HS codes chapter 01 to 98 is classified under 21 sections.
The HS code in India is better known as ITC-HS code. This stands for Indian trade clarification based on the harmonized system of coding. It is an 8 digits code adopted for export import data. The directorate general of foreign trade is the regulatory authority for ITC HS code.
The Indian harmonized code is classified into two schedules
· ITC HS code schedule 1 tells the rules and regulations relating to the imports
· ITC HS code schedule 2 contains rules and regulations regarding the exports
With the implementation of goods and services tax in the Indian economy, the role of the HS code has become more important. Now knowing the correct harmonized codes of the product is required during return filing for an accurate levy of GST rates on products in India
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