Nomenclature - Taxation

Taxation

Indirect Taxes, Harmonized system of Nomenclature :- Harmonized system of Nomenclature (HSN) is an internationally accepted product coding system formulated under the auspices of the General Agreement of Tariffs and Trade (GATT). It forms the basis of the system of classification in Central Excise Act, 1985. It has been developed by the Customs Co-Operation, Brussels

HARMONISED COMMODITY DESCRIPTION AND CODING SYSTEM

The Harmonized Commodity Description and Coding System - commonly known as "Harmonized System"(HS ) is a multipurpose international product nomenclature developed by the World Customs Organization (WCO). This Nomenclature comprises the headings and subheadings and their related numerical codes, the Section, Chapter and Subheading Notes and the General Rules for the interpretation of the Harmonized System. It comprises about 5,000 commodity groups, each identified by a six digit code, arranged in a legal and logical structure and is supported by well-defined rules to achieve uniform classification. The system is used by more than 190 countries and economies as a basis for their Customs tariffs and for the collection of international trade statistics. Over 98% of the merchandise in international trade is classified in terms of the HS.

HARMONISED SYSTEM (HS) - IT'S ROLL

• The HS is a "universal economic language and code" for goods, and an indispensable tool for international trade.

• It contributes to the harmonization of Customs and trade procedures and thereby reduces the costs related to international trade.

• It is also extensively used by governments, international organizations and the private sector for many other purposes such as internal taxes, trade policies, monitoring of controlled goods, rules of origin, freight tariffs, transport statistics, price monitoring, quota controls, compilation of national accounts, and economic research and analysis.

HOW IS THIS HS HANDLED/GOVERNED ?

This Harmonized System is governed by "The International Convention on the Harmonized Commodity Description and Coding System". The World Customs Organization (WCO) maintains the HS by updating it periodically. This updation is necessary in light of developments in technology and changes in trade patterns. The WCO manages this process through the Harmonized System Committee which is represented by the Contracting Parties to the HS Convention. This Harmonized System Committee prepares amendments, updating the HS, and meets twice a year. All Contracting Parties are obliged to implement the amendments on the date scheduled for their coming into force.