The World Customs Organization developed HS Code or the Harmonized Commodity Description in 1998. It was developed as a multipurpose international product nomenclature and was used to describe products being shipped across international borders. The code serves as a foundation for import and export classification around the world. The HS Code is updated every 5 years. The code was last updated in 2017.
The HS Code list is used by 200 countries around the world. Over 98% of goods traded internationally use the HS Code. The code is used by the government, private sector firms, and international organizations. The HS Code has become a crucial tool for international trade as the universal economic language and coding of goods. The uses of the HS Code list are:-
The harmonized system has 5300 product descriptions/articles classified in headings and subheadings. The code is arranged in 99 chapters. The chapters are further divided into 21 sections. The sections are sub-divided into 1224 headings and 5224 sub-heading. The logical and legal structure has helped the code become universally accepted.
The Indian HS Code is a six-digit identification code that can be broken into three parts. The first two digits (HS2) identify the chapter where the product is classified. The next two digits (HS4) are used to denote the product grouping within the chapter. The last two digits (HS6) are specific to the product. It is important to include the right HS Code in your documentation. Using the wrong code can result in delays or penalties.
Countries have the flexibility of adding the HS code by additional digits to categorize commodities without modifying or changing the first six digits.
The HS Code for a product export in India is explained by the Indian Trade Classification Schedule (ITC Code) based on the harmonized system. ITC Schedule II contains 97 chapters. Indian custom has an eight-digit ITC-HS Code to classify export commodities. The first six digits follow the universal HS Code list and the last two digits are as per Directorate General of Foreign Trade Schedule II classification. E.g. 09024020 is used to describe Indian black tea.
HS code for import helps to determine import duty rates and to determine if the product qualifies for preferential rates under a free trade agreement. It allows helps importers to ensure they are not importing anything banned or hazardous. India import policies are described in ITC HS import Schedule I. Schedule I is divided into 21 sections and each section is divided into chapters. Schedule 1 has 98 chapters. e.g. HS code 090240 is for other black tea.
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