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1. Harmonized System of Nomenclature, or HSN, was conceived and developed by the World Customs Organization (WCO) with the vision of classifying goods from all over the World in a systematic and logical manner.
2. HSN is widespread and is adopted in more than 200 countries, covering a staggering 98% of goods in the World.
3. India has already been using HSN system since 1986 in the Central Excise and Customs regime.
4. It is by far, the best logical system of classification and identification adopted in International Trade.
5. It is a crucial feature to analyze the movement of goods across the World.
6. It has helped in reducing efforts and costs related to complex procedures of International Trade.
7. These set of defined rules is used for taxation purposes in identifying the rate of tax applicable to a product in a country.
8. India is all set to have its very own Goods & Services Tax or GST, which applies to all goods and services alike.
9. Indian manufacturers under GST shall be required to follow a 3-tiered structure of HSN.
10. It is a combination of different sections, further drilled down to chapters, which are further classified into headings and sub-headings.
11. It is also used to determine the quantum of product exported or imported in and out of a country.
12. Now that we have been through the concept of HSN, we now move on to understanding HSN from the Indian context.
13. It shall subsume many indirect taxes and reduce the burden on the end consumer.