International Trade is termed as the trade taking place between 2 or more nations in the world in exchange of various goods and services. We must analyse and understand the need for the trade the nature of buying and selling of the products from various nations.
The concept of free trade also comes up as it is the process of selling the products between the nations without the use of any fees, duties, quotas, tariffs, and the trade restrictions. The concept of Laissez Faire meaning “Leave Us Alone” enters the stage in the current scenario.
Most of us believe that free trade will hurt the developed nations like USA, UK, Germany, France, Australia, Canada and other nations compared to the developing and under developed nations.
If you look at the broader picture the Harmonised Systems and the International Trade goes hand in hand and let us analyse the concept of the “Harmonised Systems”.
If you look at the world scenario, millions of good and services are exported and imported like the Spices, Apparel, Gems, Hardware components, Jewellery, Electrical and Electronic components, Petroleum Products, Cement, Bricks, Steel and Iron and others. A uniform exchange and trade systems will play a vital role in getting rid of complications.
Harmonised Systems is a set of standardised numerical and theoretical methods available to analyse and classify the products meant for imports and exports by the custom authorities of nations around the world to ease the trade.
There are certain structural components of the Harmonised Systems Code given below as follows:
This helps in methodical classification of products, and used to gather data and solve problems.
Ever since India has become the member of the World Trade Organisation (WTO) on 1st January 1995has already started following the Harmonised Systems Code for doing the classification of the products for the Customs and the Central Excise. It is termed as Universal Economic Language.
The Harmonised System Code is a worldwide terminology established for classifying products in India and offers various standards to classify the products uniformly for taxation, and another economic research.
If you look at the international level, the Harmonised System Code is the 6-digit code systems, and in India it is containing 10 or 12 digits with a motive to cover more products in the coming years. Under the domain of the Central Excise Tariff, you will be surprised that only 20 sections are used and the final one dealing with Antiques and Art Works is not important for the Central Excise or for GST. HSN codes for GST is implemented since July 2017.
Let us categorise the Harmonised System Code and the classification digit technology in India can be divided like:
For example:If you take the number 07031010 means that it is 07 is thechapter, 03 means Headings and 10 means the Sub headings and other 10 means the concerned product like Chilled Onions.
Hence one can say that in the first 2 digits are specifying the type of commodities and the next digits levels are specifying the products under that groups. During the six digits the group gets narrowed down to a particular commodity.
The next 2 group dealing with 8 digits deals with a unique identify of a commodity Harmonised System Code.The Harmonised System Code has gone through various revisions and modified in 1996, 2002, 2007 and 2012.
The Harmonised System Code offers a unique frame work for identifying products, this is used for creating various tax based and commercial rules under the Tax management schemes brought by the Government of India.
Harmonised Systems in The World
The Harmonised System Codeis the major international product terminology created by the World Customs Organisation (WCO). It is used in more than 200 nations and helps in harmonising the trade procedures and reducing the bottlenecks arising out of international trade and commercial activities around the globe.
The fact of the matter is around 70 nations along with more than 30 national and international institutions participated in various conferences of the Harmonised System Code and its working committees, is the yardstick to showcase the vast interest generated by this project.
Non-Governmental Organisations that are supporting Harmonised System Code is:
FREQUENTLY ASKED QUESTIONS:
Are the HS codes numbered consecutively?
The Heading and Subheading are numbered consecutively by WCO.
How to see the details of the latest decision taken by the HS codes Committee?
You must go to the Article 7 of the HS Convention.
When the HS Code are amended?
The HS Codes are amended every 5 years.
Which agency controls the HS Codes?
World Customs Organisation (WCO) controls the activities regarding the HS Codes.
How to make the changes in the Harmonised Systems Codes?
You can make the changes to the Harmonised Systems Codes by bringing to the notice of any inter-governmental establishment and they will ask the WCO-World Customs Organisation to make all changes.
Is there any way WCO can speed up the process of the working of the Harmonised System Codes?
An excellent question. The policies and procedures are brought after extensive consultations with the Economists, Finance Ministers, Experts and other Committees. We are working on that direction.
Do you encourage the entry of Private Enterprises or Business tycoons into the HSC?
Well, we will not entertain Business Tycoons like Ratan Tata or Elon Musk nor private enterprises like Tesla or Tata. However, the WCO will be extremely pleased to welcome the representatives of the International Organisation as the observers.
When the Tax payers under the GST in India need to furnish the HSC in their invoices?
In India, HSN Codes must be mentioned in Invoice. For different turnover different numbers of HSN codes are required. Businesses with turnover above Rs. 5 crore must use 6-digit HSN code for all invoices. Turnover less than or equal to Rs. 5 crore must use 4-digit HSN code for all the B2B invoices.