What the HSN or SAC code tells you
Every line on a GST invoice needs a classification code. Goods use HSN codes, taken from the Customs Tariff: the first 2 digits are the chapter (54 is man-made filaments), 4 digits the heading (5407 is woven fabric of synthetic filament yarn) and 6 or 8 digits finer subheadings. Services use SAC codes, which start with 99: 9988 is manufacturing services on goods owned by others, the home of job work. Under Notification 78/2020-Central Tax, a business with turnover up to ₹5 crore shows at least 4 digits on B2B invoices, and one above ₹5 crore shows 6.
How the GST rate is decided
The code points to an entry in a rate notification: Notification 9/2025-Central Tax (Rate) for goods, in force since 22 September 2025, and Notification 11/2017-Central Tax (Rate) as amended by 15/2025 for services. The tax itself is one line:
GST = taxable value × rate. Within a state, half is CGST and half SGST. To a buyer in another state, the whole rate is IGST.
Garments and made-ups have one extra test: 5% if the sale value of a piece is up to ₹2,500, and 18% if it is more. Job work has another: the job work rates apply only when the goods belong to a GST-registered person (section 2(68) of the CGST Act, and CBIC Circular 126/45/2019-GST). Otherwise the work is 18%.
Worked example
A Surat wholesaler bills a Mumbai retailer for 40 polyester sarees at ₹850 and 10 kurtis at ₹2,800. The sarees are fabric (5407) at 5% at any price. Each kurti is above ₹2,500, so 18%. Mumbai is in another state, so the tax is IGST.
| Item | HSN | Value | Rate | IGST |
|---|
| 40 sarees × ₹850 | 5407 | ₹34,000 | 5% | ₹1,700 |
| 10 kurtis × ₹2,800 | 6206 | ₹28,000 | 18% | ₹5,040 |
| Total | | ₹62,000 | | ₹6,740 |
What changed on 22 September 2025
| Item | Before | From 22 Sep 2025 |
|---|
| Man-made fibre (PSF, VSF) | 18% | 5% |
| Man-made yarn (POY, DTY, VFY, spun) | 12% | 5% |
| Garments and made-ups, lower rate | 5% up to ₹1,000 | 5% up to ₹2,500 |
| Garments and made-ups above the limit | 12% | 18% |
| Residuary job work | 12% | 18% |
| Goods transport (GTA), with input tax credit | 12% | 18% |
Woven fabric stayed at 5%, gold, silver and jewellery at 3%, and diamonds at 0.25% (rough) and 1.5% (cut and polished). The 57th GST Council meeting on 8 October 2026 made no rate change for any of these, and the later amendments to the goods notification touched tobacco, beverages, fertilisers and tyres only.
Common mistakes
- Charging 12%. That slab no longer exists for these goods and services.
- Testing the ₹2,500 limit on the bill total or the MRP. It is the sale value of each piece.
- Charging the 5% job work rate to an unregistered customer. Without a registered owner it is 18%.
- Billing polished diamonds at 0.25%. That rate is for rough or simply sawn stones; polished is 1.5%.
- Splitting making charges out of a jewellery sale at a service rate. On a sale, the whole bill is 3%.
When it is worth putting this in your billing software
If you raise dozens of bills a day, set the HSN once on each item and let the software apply the rate, including the ₹2,500 switch for garments and the registered-customer check for job work. We build billing software for Surat businesses that does this. For a one-off bill, the GST invoice generator takes these codes, and the gold and jewellery price calculator adds 3% GST to a jewellery bill.
Guides for the codes people look up most
Sources, checked 9 November 2026: Notification 9/2025-Central Tax (Rate), 10/2025, 13/2025 and 15/2025 on the CBIC tax portal; CBIC Circular 126/45/2019-GST; the PIB FAQs on the 56th GST Council and GST Reforms 2025 backgrounder; the 57th GST Council recommendations; and Notification 78/2020-Central Tax. 84 codes in all.