Every line on a GST invoice needs a classification code, and the code depends on whether you sell goods or services. Goods use HSN codes; services use SAC codes. Using the right one — with the right number of digits — keeps your invoice valid and helps your buyer claim credit.
What is the difference between an HSN code and a SAC code?
An HSN code (Harmonised System of Nomenclature) classifies goods. A SAC (Services Accounting Code) classifies services. SAC codes are six digits and begin with 99; HSN codes for goods do not.
| HSN code | SAC code | |
|---|---|---|
| Used for | Goods | Services |
| Based on | The international Harmonised System of Nomenclature | A services classification adopted for GST |
| Format | 4, 6 or 8 digits | 6 digits, starting with 99 |
| Appears on | GST invoices, challans, returns | GST invoices, returns |
How many digits must an invoice show?
- Annual turnover up to ₹5 crore: 4-digit HSN on B2B invoices; optional on B2C invoices.
- Annual turnover above ₹5 crore: 6-digit HSN on all invoices.
- Services: the SAC code, which has six digits.
These limits come from Notification 78/2020-Central Tax as amended. Check the current text if your turnover is near a threshold.
How do you find the right HSN or SAC code?
- Describe exactly what you sell — material, use and form.
- Search for the item in the official GST portal's HSN/SAC search or the customs tariff.
- Pick the most specific matching entry and note its GST rate.
- If two codes seem possible, ask a chartered accountant or check the notifications — the wrong code can mean the wrong tax rate.
Does the HSN code decide the GST rate?
Yes. The GST rate attaches to the code and description, not to the product name you use at the shop. Since the GST rate rationalisation on 22 September 2025, most goods and services are taxed at 5% or 18%, with 40% on a small list of items. Always confirm the rate for your code. Once you have it, see how to calculate GST on an invoice.
Common HSN and SAC mistakes
- Leaving the code blank where it is required.
- Using a goods code for a service, or the reverse.
- Too few digits for your turnover.
- Copying a code from a competitor without checking it matches your product.
Related guides: how to create a GST invoice, how to calculate GST on an invoice, GST invoice vs bill of supply, proforma invoice vs tax invoice, delivery challan vs invoice.
Add HSN/SAC codes to every line and download a GST invoice free — no sign-up, no watermark. Create a GST invoice
Frequently asked questions
What is an HSN code?
An HSN code is a standard code that classifies goods for tax purposes. It appears on GST invoices and determines the GST rate.
What is a SAC code?
A SAC code classifies services under GST. It has six digits and begins with 99.
How many digits of HSN code are required on a GST invoice?
Businesses with annual turnover up to ₹5 crore generally need 4 digits on B2B invoices; above ₹5 crore, 6 digits on all invoices.
Does BillsFreind support HSN/SAC codes?
Yes. The GST invoice generator has an HSN/SAC field on every line item.
Related guides
- Proforma Invoice vs Tax Invoice: What's the Difference?
- Delivery Challan vs Invoice: What's the Difference?
- GST Invoice vs Bill of Supply: What's the Difference?
- How to Calculate GST on an Invoice (With Examples)
By BillsFreind Team · 2026-10-26 · 2 min read