In today’s blog, we tell you what an HSN code is and why this code is so important for GST filing. Then, we’ll narrow our focus to a specific construction HSN code.
But before we begin, if you’re someone who loves to keep tabs on what’s happening in the world of construction and infrastructure, keep visiting NYGGS. You’ll also get informative blogs on how the latest technologies, such as construction ERP software, AI/ML, robotics, or drones, are transforming this industry.
Let’s take it from the top.
What is an HSN code?
HSN stands for Harmonized System of Nomenclature, developed by the World Customs Organisation (WCO). It is a global standard for the classification of over 5,000 products. It helps customs authorities in different countries ensure that the goods are the same and helps determine import duties. Worldwide, it is a six-digit code used to group and categorise various goods and commodities being exported. Some countries specify even further with an eight-digit code.
Now for specific construction materials, you’ll be looking for the construction HSN code.
But, construction works are considered services as per GST in India; hence, it is supposed to have an SAC code instead of an HSN. What’s that?
What is the SAC Code?
SAC, which stands for Service Accounting Code, is a unique six-digit code similar to the HSN code. SAC codes are issued by the Central Board of Indirect Taxes & Customs (CBIC) to help in identifying and categorising services for GST calculation. The two digits ’99’ represent the service category in the SAC code, and the further digits specify details of the service.
Difference Between HSN and SAC Codes in the Context Of Construction
- HSN codes are used for classifying goods and materials. So construction HSN code applies to materials like cement, concrete blocks, bricks, steel, etc.
- SAC codes, on the other hand, are used for classifying services. In construction, services such as construction work, site preparation, and building completion fall under SAC codes.
Essentially, HSN codes categorise the physical materials used in construction, while SAC codes categorise the services provided during the construction process.
Please note: Because construction work is considered a service in India and therefore has SAC codes. It’s more commonly referred to as a construction HSN code though, even for services under GST.
It’s time to look for HSN codes for civil construction work with material.
SAC/HSN Code for Construction Works and Services
Here is a detailed list of construction HSN codes and SAC codes of construction and civil engineering services, along with their descriptions.
Construction Material HSN Code
Group 99541: Building Construction HSN Codes
Group 99542: Construction Services HSN Codes of Civil Engineering Works
Group 99543: SAC/HSN Code for Site Preparation Services
Group 99544: SAC/Construction HSN Codes for Assembly and Erection of Prefabricated Structures
Group 99545: SAC Code for Special Trade Construction Services
Group 99546: SAC Code for Installation Services
Group 99547: SAC Code Building Completion and Finishing Services
Conclusion
As you can see, the HSN code starting with digits 9954 is used to identify all building and construction work. And the last two digits in the code tell you exactly what type of construction it is. You need to use construction HSN codes and SAC codes correctly to create accurate invoices, comply with tax regulations, and follow GST rules.
FAQs
Q. What is the HSN code for construction?
The construction HSN code is 9954 for general construction services.
Q. Why is the HSN code for civil construction used in India?
The construction HSN code is a global system of classification used to categorise materials and services for taxation purposes. In India, the HSN and SAC codes are used to categorise items and services for GST purposes.
Q. What is the HSN code for cement?
The HSN codes for cement in India are:
- 2523: For Portland cement, aluminous cement, slag cement and similar hydraulic cement.
- 252321: This code is for white Portland cement, whether or not artificially coloured.
- 252329: This code is for other Portland cement.
- 252330: This code is for aluminous cement.
And the GST rate for these codes is 28%.
Q. Do I need to mention the HSN code on invoices for civil construction work?
Yes, GST rules mandate the mention of construction HSN codes and SAC codes on invoices for all goods and services supplied.
Q. Is there any penalty for not mentioning the HSN code on invoices for construction services?
You may have to bear a penalty of ₹50 per day for failure to mention the construction HSN code which can go up to a maximum of ₹5,000.
Disclaimer: HSN or SAC codes given above are updated and the best of our information. There may be variations due to updates by the government. Please note that we are not responsible for any inaccuracies in the information provided; kindly refer to the CBIC website for the most up-to-date codes.