International shipping can be a challenging task for businesses. From customs clearance processes to ensuring accurate documentation, many factors could go wrong, leading to returned, undelivered, or worse, missing shipments.
The HSN code is a crucial part of international shipping that allows importers, exporters, customs officials, and logistics providers to understand one another and facilitate smooth trade between countries with different regulatory requirements and tariff structures.
What is an HSN Code?
In shipping terms, an HSN code, or Harmonized System Nomenclature code, is a standardized system of names and numbers used to classify traded products internationally. What is the use of an HSN code? Simply put, it allows countries to identify goods during import and export, and apply duties and taxes accordingly.
Developed by the World Customs Organization (WCO), this system is used by over 200 countries worldwide and is widely recognized as an international product codes, ensuring consistency in customs clearance processes.
The HS codes (the exact number of digits may differ depending on the country) categorize goods based on their nature, composition, and purpose. They are further subdivided into more specific categories with additional digits to provide a highly detailed classification of tariff items.
Understanding the structure of HSN Codes in India
India uses an 8-digit HSN code1 instead of the typical 6-digit code; here’s how it is broken down:
- Chapter: The first two digits represent the chapter, broadly classifying goods into major categories.
- Heading: The next two digits represent the heading within the chapter, narrowing down the product type.
- Subheading: The following two digits represent the subheading, providing further specificity.
- Tariff Item: The final two digits are specific to the Indian tariff system and provide even greater detail about the product. This helps determine the exact duty rates and applicable regulations.
Example:
Suppose you're exporting a specific type of processed cheese to India. The 8-digit HSN code might be 0406.90.10. The HSN breaks down as follows:
- 04: Chapter (Dairy Produce...)
- 04.06: Heading (Cheese and Curd...)
- 0406.90: Subheading (Processed Cheese...)
- 0406.90.10: Tariff Item (Specific type of processed cheese as per Indian tariff schedule)
Understanding how HSN codes work in India is crucial for any international shipping, importing, or exporting business. It ensures accurate classification for customs clearance, duty calculation, and compliance with Indian trade regulations.
Why businesses in India need to take note of HSN Codes in international shipping
- Accurate customs classification: HSN codes ensure that all countries involved in a shipment use the same product classification. This eliminates confusion, speeds up customs clearance, and prevents costly delays.
- Determining duty and tax rates: HSN codes form the basis for deciding import duties and taxes. Using the correct HSN code for importing and exporting goods ensures accurate assessment and helps businesses avoid penalties. This is crucial for understanding the classification of tariff rates applicable to your products.
- Facilitating trade agreements: HSN codes are instrumental in implementing preferential tariffs under trade agreements. This allows businesses to take advantage of reduced duty rates and improve their cost competitiveness in international markets.
- Compliance and risk mitigation: Correct HSN code classification ensures compliance with international trade regulations. This minimizes the risk of fines, delays, or shipment rejections, safeguarding your business from potential disruptions.
- Data Collection and Trade Statistics: Governments use HSN codes to track import and export data, providing valuable insights into trade patterns and economic trends. This information helps formulate trade policies and promote economic growth.
DHL Express MYGTS: Simplifying HSN codes and duty calculation
Determining the correct HSN code and calculating associated duties can be complex, especially when dealing with diverse product lines and varying international regulations. To simplify this crucial aspect of international shipping, consider using MYGTS (My Global Trade Services), a free and powerful online tool designed to help businesses navigate the intricacies of HSN code classification, duty calculation, and customs requirements.
MYGTS empowers businesses to take control of their international shipping operations with a suite of user-friendly features:
- Find tariff codes: Easily search for the correct HSN codes for your products using keywords or product descriptions. MYGTS provides a comprehensive database of HSN codes, ensuring accurate classification and minimizing the risk of errors.
- Pre-shipment planner: Effectively plan your shipments with the Pre-shipment Planner, an all-in-one tool that helps you comply with import and export regulations and calculate landed costs.
- Compare trade lanes: The Trade Lane Comparison feature allows you to explore different shipping routes and compare landed costs and customs requirements across various destinations. This helps you make informed decisions and optimize your shipping strategy.
- Check customs requirements: Understand your target countries' specific import and export requirements, ensuring compliance and preventing potential delays or penalties.
- Product Catalog: The Product Catalog stores your frequently shipped products and their corresponding HSN codes for quick and easy access. This feature streamlines your shipping process and saves valuable time.
With MYGTS, businesses in India shipping internationally can enjoy the following benefits:
- Increased accuracy: MYGTS helps you determine the correct HSN codes and calculate duties precisely, minimizing the risk of errors that can lead to delays and penalties.
- Enhanced efficiency: Automate critical tasks like HSN code lookup and duty calculation, freeing up your time and resources to focus on other aspects of your business.
- Improved compliance: Stay up-to-date with the latest HSN code changes and trade regulations to ensure compliance and minimize risks.
- Better cost management: Accurately estimate landed costs and make informed decisions about your shipping strategy, optimizing your expenses and improving profitability.
By leveraging MYGTS, businesses can streamline their international shipping processes, reduce costs, enhance compliance, and improve overall efficiency in the global marketplace.
Enjoy smooth international shipping with DHL Express.
Accurate HSN code classification is paramount in the world of international shipping. It ensures compliance, facilitates trade, and helps businesses optimize their shipping operations, whether from overseas shipping to India or from India to overseas destinations. Make DHL Express your international shipping partner and leverage our global network and user-friendly solutions like MYGTS to obtain accurate HSN codes and streamline your international shipping process.
Open a business account today and start using MYGTS for all your overseas shipping needs.
