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What Most Business Owners Get Wrong About HSN/SAC Codes-❌ Mistake 1: Using generic or guessed HSN/SAC codes-❌ Mistake 2: Using the same code for all items-❌ Mistake 3: Missing the unit of measurement or descriptionThe Only Framework You Need for HSN/SAC-Ready Invoices-Identify → Match → Generate-1. Identify the HSN or SAC Code-2. Match the Correct GST Rate-3. Generate the Invoice AccuratelyQuick Reference of Common HSN & SAC CodesHow to Generate an Invoice With HSN/SAC Codes-Step 1: List your items clearly-Step 2: Add HSN or SAC to each line item-Step 3: Add the GST rate as per law-Step 5: Add mandatory footer details-Step 6: Export the invoiceReal-World Invoice With HSN/SAC-Scenario Example-Invoice BreakdownWhy HSN/SAC Codes Matter More Than Most Businesses Realize-1. Prevent GST mismatches-2. Strengthen buyer trust-3. Reduce audit risk-4. Avoid penaltiesA Simple Truth to RememberFAQ
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How to Generate an Invoice With HSN and SAC Codes

General
Dec 12, 2025
Bill In Second
Bill In Second

CEO

How to Generate an Invoice With HSN and SAC Codes

You generate an invoice with HSN/SAC codes by identifying the right code for your goods or services, mapping it to the correct GST rate, and adding it to each line item before exporting or sharing the invoice. A good hsn sac invoice generator automates this mapping, so you avoid mismatched tax rates or compliance errors.

What Most Business Owners Get Wrong About HSN/SAC Codes

Many businesses think HSN and SAC are just “codes to fill.” They’re not. They determine:

  • The exact GST rate you should charge
  • Whether your invoice is GST-compliant
  • Whether your returns may get flagged for mismatches
  • How your items appear in GSTR-1 and GSTR-3B

Yet two common mistakes repeat across small businesses:

❌ Mistake 1: Using generic or guessed HSN/SAC codes

Incorrect codes cause mismatched tax data, which leads to:

  • Notices during GST scrutiny
  • Unclaimable ITC for customers
  • Delays in filing

❌ Mistake 2: Using the same code for all items

Different goods and services often require different codes even within the same business.

❌ Mistake 3: Missing the unit of measurement or description

GST rules require:

  • Product/service name
  • HSN or SAC
  • Quantity
  • Rate
  • Tax breakup (CGST/SGST/IGST)

Without this, invoices may be considered incomplete.

The Only Framework You Need for HSN/SAC-Ready Invoices

You can simplify everything using a three-step model:

Identify → Match → Generate

1. Identify the HSN or SAC Code

  • If you sell goods, look up an HSN (Harmonized System of Nomenclature).
  • If you provide services, identify the right SAC (Services Accounting Code).

Where to find codes:

  • GST Council Handbook (Gov link)
  • CBIC HSN/SAC directory
  • Trade councils
  • Industry-specific guidelines

If you want a complete breakdown of all rules that make an invoice GST-compliant, read our guide on creating a GST-compliant invoice in India.

2. Match the Correct GST Rate

Each HSN/SAC belongs to a tax bracket:

  • 0%
  • 5%
  • 12%
  • 18%
  • 28%

You must charge the tax exactly as per code.

Example:

  • HSN 0402 (Milk Powder) → 5%
  • SAC 9983 (Other Professional Services) → 18%

3. Generate the Invoice Accurately

Your invoice must include:

  • Seller details
  • Buyer details
  • Invoice number + date
  • Product/service description
  • HSN or SAC code
  • GST rate + split
  • Total amount

A reliable hsn sac invoice generator automates:

  • Tax calculation
  • GST breakup
  • Line-item structure

Quick Reference of Common HSN & SAC Codes

TypeItem/ServiceCodeGST RateNotes
GoodsMobile Phones851718%Electronics category
GoodsPackaged Food210618%Common in FMCG
GoodsApparel (Below ₹1,000)61095%Price-linked tax slab
ServicesIT/Software Services998318%Most tech businesses
ServicesConsultancy99831118%Applies to professional freelancers
ServicesRenting of Property997218%Includes commercial rent

How to Generate an Invoice With HSN/SAC Codes

Step 1: List your items clearly

Each item/service must have its own row.

Example:

  • Website development
  • Hosting charges
  • Annual maintenance

Step 2: Add HSN or SAC to each line item

Goods → HSN

Services → SAC

Even mixed invoices are allowed.

Step 3: Add the GST rate as per law

CGST + SGST (if same state)

IGST (if interstate)

Step 4: Calculate totals

For each line:

Taxable Value → GST % → CGST/SGST/IGST → Total

Step 5: Add mandatory footer details

  • Reverse charge applicable?
  • Place of supply
  • Invoice notes (optional)
  • Signature (digital/physical)

Step 6: Export the invoice

PDF or printable format

No editing after final invoice number is issued.

If you prefer generating invoices online for free, here’s a guide that walks you through the simplest method.

Real-World Invoice With HSN/SAC

Scenario Example

A digital agency delivers:

  • Social media management (SAC 998365)
  • Website design (SAC 998314)
  • Hosting (SAC 998365)

Invoice Breakdown

DescriptionSACAmount (₹)GST%Tax AmountTotal
Website Design99831425,00018%4,50029,500
Social Media Management99836515,00018%2,70017,700
Hosting Support9983655,00018%9005,900
Total—45,000—8,10053,100

The GST filing becomes easier because each service has its code.

Why HSN/SAC Codes Matter More Than Most Businesses Realize

1. Prevent GST mismatches

Incorrect codes trigger notices during annual return audits.

2. Strengthen buyer trust

Your buyers claim ITC properly only when your invoice is accurate.

3. Reduce audit risk

Government systems auto-match:

  • Invoice details
  • Tax slabs
  • Tax paid

Correct coding avoids red flags.

4. Avoid penalties

As per CBIC rules, misclassification may lead to:

  • Tax differences
  • Interest
  • Penalties

A Simple Truth to Remember

Correct HSN/SAC = Correct Tax = Zero Compliance Stress

Once your codes and GST mapping are right, generating compliant invoices becomes straightforward. You save hours in GST filing, prevent invoice disputes, and build clean, audit-ready records.

FAQ

1. Do we need HSN/SAC codes on every invoice?

Yes. Businesses with turnover above ₹5 crore must mention 6-digit HSN/SAC. Below ₹5 crore, you need at least 4-digit codes (for B2B invoices).

2. Can one invoice contain both HSN and SAC codes?

Yes. If you sell both goods and services, your invoice may include both.

3. What happens if I use the wrong HSN or SAC code?

You may face:

  • Mismatched GSTR-1 and GSTR-3B
  • GST notices
  • ITC disputes from buyers
4. Are HSN and SAC codes updated every year?

GST updates them periodically. Check updates before issuing invoices.

5. Do all businesses need an HSN SAC invoice generator?

Not required, but it helps avoid errors, especially for:

  • Multi-item sellers
  • Service providers with varied services
  • Businesses filing monthly GST returns

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