HSN code for footwear
HSN code stands for Harmonised System of Nomenclature Code and it is essential for classifying goods for tax and customs purposes in India. It plays a vital role in the footwear industry. The specific HSN codes for different types of footwear vary based on the type and composition of materials. Here is a table showing how to identify the right HSN codes in the footwear industry:
| HSN code | Footwear category |
| 64 | General footwear |
| 6115 | Sports footwear with outer soles and uppers made of rubber or plastic |
| 6401 | Waterproof footwear with rubber or plastic outer soles and uppers |
| 6402/6403 | Sports footwear with rubber or plastic outer soles and uppers |
| 6404 | Footwear with rubber or plastic outer soles and textile uppers |
| 6405 | Other footwear not specified elsewhere |
| 6406 | Footwear parts including soles, insoles, heel cushions, etc. |
| 998721 | Repair services of footwear (SAC code) |
How to identify the correct HSN code for footwear
Here are a few key points that help you identify the correct HSN code with close attention to the material, type, and purpose:
Material composition: HSN codes differ based on whether the footwear is made from rubber, leather, textile, or other synthetic materials such as plastic.
Footwear type: The HSN code varies based on the type of footwear such as between sports shoes, sandals, slippers, and waterproof footwear.
Purpose and classification: Some HSN codes specifically address shoes with protective features such as metal toe caps, or parts such as removable insoles and heels.
Common errors in HSN code classification and how to avoid them
Using the wrong HSN code is a frequent issue that leads to tax discrepancies and penalties. Here is how to avoid some of the most common mistakes:
Material overlap: When footwear contains multiple materials, choose the code based on the outer sole and upper material.
Incorrect product grouping: Grouping sports footwear or specialised footwear incorrectly is a common error. Always verify the product specifications.
Overlooking code updates: Regular updates occur in HSN code classifications so stay informed on any changes by consulting the latest tax notifications.
Compliance and documentation for footwear HSN codes
Proper compliance with HSN codes ensures accurate tax filings and smooth customs processes. Here is a checklist for essential documentation that you must have to simplify this process:
GST filing requirements: Footwear businesses must submit GSTR-1 for sales, GSTR-3B for comprehensive tax payment, and GSTR-9 for annual returns.
Invoicing accuracy: Include HSN codes on invoices for transparency, particularly for footwear with different tax rates.
Audit and reconciliation: Large turnover businesses, those that exceed Rs. 5 crore, need to reconcile financials with GSTR-9C to avoid any discrepancies.
How GST impacts footwear
The GST rates on footwear have evolved over the years and this affects the costs across various segments. Here is an updated overview of the GST rates applicable:
| Category | GST rate |
| Handmade footwear | Nil |
| Footwear under Rs. 1000 | 5% |
| Footwear between Rs. 1000- Rs. 1500 | 12% |
| Footwear above Rs. 1500 | 18% |
For footwear priced below Rs. 1,000, the GST rates rose from 5% to 12%, as per Notification No. 14/2021 issued by the Ministry of Finance. As a result, shoes priced below Rs. 1,000 are now more expensive, as both CGST and SGST at 6% each are applied.
In terms of tax returns, footwear businesses must file the following:
GSTR-1: To report sales details
GSTR-3B: To summarise purchases and sales
GSTR-9: For annual returns
GSTR-9C: For large businesses with turnover above Rs. 5 crore
Conclusion
Accurate HSN code classification simplifies tax processes and enables smooth trade operations for businesses in the footwear sector. Proper tax planning and documentation practices go a long way in optimising costs and ensuring regulatory adherence. Moreover, businesses in need of expansion can also consider applying for a business loan to support growth amidst changing tax regulations.
