HS code stands harmonized systems code. The World Customs Organization or WCO developed the code as a multipurpose international product classification describing the product being shipped. Introduced in 1988 the code is maintained by the WCO. The headquarters of the WCO is in Belgium and has over 200 member countries. Every product that crosses customs must have an HS code.
HS codes have the following features:-
• It has 8 to 10 digits.
• The code is classified based on economic activity or component material. It has 5000 commodity groups. E.g. animal and animal products in one section.
• The code is classified into 99 chapters. Each chapter has 21 sections. The title of the chapter and section is general, while the heading and sub-heading will be more detailed.
• The first two are used to designate the HS Chapter. The second two digits depict the heading while the last two digits are for the sub-heading.
• Some countries have longer HS codes the first six-digit identification code is the same for all countries. The next 2/4 digits will be country-specific.
HS Codes are an extremely significant part of the international code. The code covers 98% of commodities traded over the world. The code is by governments, importers and exporters, and international organizations. Every bill of material or invoice contains the HS codes for the product being traded. The code needs to be part of the paperwork for international trade.
The government determines custom duties for goods. Custom officials can collect the tariffs based on the classification in HS Codes. A uniform identification system for all imported and exported goods is vital for international trade. It also allows for monitoring the entry or exit of restricted goods these could be narcotics, hazardous wastes, or banned products. The data collected at customs can be analyzed to determine economic and trade policy. The government used the data to prepare for trade negotiations with trade partners. Collect customs during imports. It becomes easy for risk assessment and compliance when goods are in areas of custom control.
Both importers and exporters use these codes to comply with legal formalities. It is used to calculate applicable tariffs. Many factors go into calculating the tariffs. The government sometimes gives the concession to goods arriving from a particular country. The Rules of origin help the importer determine the tariff. Companies can use the code to determine the total landed cost of the imported commodity and to look for an opportunity to sell or source products. The paperwork for import and export must be filled carefully with special care the correct HS codes to prevent delay or loss in revenue.
The HS code list for the government and private agencies. E.g. The Indian HS classification is called ITC HS code. It has 8 digits Users can view the required import duty (Basic duty, CVD, and special CVD). Each country has its own HS Code list, which is used by importers and exporters for statutory compliance.
HS Code Search can be found in import-export data sites and government sites. To look for your product, you need to find to study the product description in the database and find the closest match. The HS Code search is made simple by the chapter and sectional classification. During your HS code search, it is important to remember that classification may be based on the description, composition, the purpose of use, or state of the article (live, frozen, who uses the product).
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Read Also: Importance of HS Code in Trade Business
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