HSN Code Changes in India 2025-26: What Changed, What Didn't and What Your HSN Master Needs Now

HSN Code Changes in India: Where Things Stand in October 2026

Only two of these change your 8-digit codes. The others change your tax, your reporting or who sets policy, so different people on your team need to act on them.

GST 2.0 HSN Rate Changes: Why Your HSN Code Can Be Right and Your GST Rate Wrong
The 56th GST Council changes came into effect on 22 September 2025. The old four rates were replaced by two main ones, 5% and 18%, along with a 40% rate for a short list of goods.

A lot of goods that were at 12% moved to 5%, and a lot at 28% moved to 18%. Not all of them, though, and that's where product masters go wrong.

When the code is right but the rate is old, every invoice and every return repeats the mistake. Your buyer's input tax credit gets affected, and if you import, your landed cost is off too, long before anyone spots a mismatch in a return.
Don't go by the product category

Apparel priced above ₹2,500 per piece moved from 12% to 18%, not to 5%. So always check the rate for your exact product under the current notification.
The tobacco and pan masala change on 1 February 2026

Tobacco products kept the old 28% GST plus compensation cess until the compensation cess ended on 1 February 2026. From that date, under Notification 19/2025-Central Tax (Rate), pan masala, cigarettes and tobacco moved to 40% GST, and biris moved to 18%. Pan masala now also carries a new Health Security and National Security Cess, and tobacco products carry higher excise. If your product master still has a compensation cess field for these goods, it needs updating.

New Tariff Lines From May 2026: The HSN Code Change Most Teams Missed
This is the one change that actually rewrote codes. The Finance Act, 2026 amended the First Schedule to the Customs Tariff Act, 1975, and the new and deleted 8-digit tariff lines took effect on 1 May 2026. Some products got their own lines for the first time, like krill (0306 19 10), pecan nuts (0802 99 10) and shea nuts (1207 99 50).

The related changes didn't all come on the same day, and that's where filings tend to slip.

For exporters, RoDTEP now needs a code that still exists in Appendix 4R or 4RE and a scheme that's still running. The extension won't help a deleted code. This kind of loss is easy to miss, much like unclaimed duty drawback.

XEMI's HSN 360 engine checks each product line against live tariff schedules and alerts you when a code is updated or reclassified.

See How It Works →

GSTR-1 Table 12 HSN Reporting: Why Product Master Errors Now Show Up at Filing

From the May 2025 return period, GSTN's Phase 3 rules changed how you report HSN in GSTR-1. You now pick the HSN from a dropdown instead of typing it in. Table 12 is split into separate B2B and B2C sections, and Table 13 is mandatory.

So master data problems now show up when you file. These are the usual causes:

• Sales and finance use different codes for the same product.
• The ERP holds a valid code with an old GST rate.
• A new SKU reaches the warehouse system but never the tax master.
• Your CHA files against a description that doesn't match the invoice.
  Your CHA classifies based on whatever reaches them over email or WhatsApp, and nobody spots the mismatch until a query comes back. When you're handling hundreds of SKUs and more than one CHA, this gap between your ERP and the port keeps coming back.
  

XEMI syncs two ways with SAP and Oracle, so your CHA files against the same code, rate and description your finance team uses on invoices.

See How It Works for Import Teams →

DPIIT HSN Guidebook, 8-Digit Rules and HS 2028 India: What Changes Your Classification

DPIIT released its Guidebook on Mapping of HSN Codes in September 2025. It maps 12,167 HSN codes to 31 ministries and departments, and 11,651 of those have been formally accepted. It tells you which ministry handles policy for your product, but it doesn't amend the tariff, change ITC(HS) codes or set GST rates.

Is an 8-digit HSN code mandatory for importers and exporters?

Yes, for anything that crosses the border. The GST rule for domestic invoices is separate.

The 8-digit tariff item on your Bill of Entry or Shipping Bill decides your duty, FTA preference and RoDTEP rate, and it's what your drawback claim is checked against. ITC(HS) uses the same 8 digits to decide import and export policy. They usually match, but as we saw in July 2026, they don't always change on the same day.

HS 2028: the next review is already on the calendar

HS 2028 takes effect on 1 January 2028. It brings 299 sets of amendments, and the WCO published the correlation tables in April 2026. India will update its Customs Tariff through a Finance Act, and then ITC(HS), RoDTEP, drawback and GST notifications will follow, probably weeks apart. Map your products against the correlation tables during 2027.

Penalty for Wrong HSN Code in India: What You're Actually Exposed To

There isn't one fixed penalty for a wrong HSN code. It depends on where the mistake shows up.

For dutiable goods that aren't prohibited, Sections 112 and 114 of the Customs Act cap the penalty at 10% of the duty sought to be evaded or ₹5,000, whichever is higher. Section 114A carries a penalty equal to the duty, but it only applies when there's collusion, wilful misstatement or suppression of facts. The bigger problem is that a wrong code keeps repeating on every filing until someone catches it.

HSN Compliance Checklist: How to Review Your HSN Master

Start where a mistake costs the most: high-value lines, anything that used to be at 12% or 28% GST, products in chapters affected by the May 2026 tariff lines, HSN 2202 beverages and exports where you claim RoDTEP or drawback. Then go through each product like this:

1.      Match the product description to what your CHA files against.

2.     Check the 8-digit tariff item and ITC(HS) code against the current tariff.

3.     Confirm the GST rate and the notification behind it.

4.     Check duty, exemptions and any anti-dumping position.

5.     Check import or export policy conditions.

6.     Confirm the RoDTEP and drawback entry still exists.

7.     Reconcile the code across your ERP, invoice, GSTR-1, Bill of Entry and Shipping Bill.

8.    Name an owner for each record, and decide how they'll hear about the next change.

HSN Classification Software India: How XEMI Keeps Codes, Rates and Filings Aligned

A checklist like this works once. The trouble is, the rules haven't changed just once. Since September 2025, GST rates moved, a cess was replaced, tariff lines were added and deleted, a corrigendum fixed a code six days after it was issued, and the import policy schedule caught up twelve weeks late. Cleaning up your master one time won't keep it right.

XEMI is an AI-powered trade collaboration platform, and HSN classification is one of the places where it makes the biggest difference.

XEMI customers recovered ₹12 Cr+ in duty overpayments in year one.

"XEMI flagged that we'd been using an incorrect HS code for over eight months. The duty recalculation showed we'd overpaid by more than AED 180,000." Head of Trade Compliance, Consumer Electronics Importer, Dubai

• XEMI's HSN 360 engine, powered by XI, XEMI Intelligence, recommends the HSN code for every product line with a confidence score, the applicable CCR, required declarations and current import policy. If the confidence is low, the line goes to your team to decide.
• When a tariff line you use is updated or reclassified, XEMI alerts you before your next Bill of Entry or Shipping Bill goes out. It also flags past misclassifications and guides you through recovery.
• XEMI syncs two ways with SAP and Oracle, and also connects with Microsoft Dynamics and Tally, so your CHA, your finance team and your export desk all work from the same code, rate and description.
• XEMI Clear checks every field across your documents before filing to ICEGATE, and XEMI Vault keeps seven years of audit-ready records.
  To be clear, HSN 360 doesn't replace your own judgement or your CHA's expertise. It takes away the lookup work around them. And if you ship fewer than five consignments a month, a careful spreadsheet review every quarter may be all you need.

See HSN 360 run on your own product lines, including the tariff lines that changed on 1 May 2026.

Request a Demo →