Enterprises are the foundation of any country and many of them. The total number of registered and unregistered SMEs is 4,250 crores. These make up over 90% of the total unit and employ 40% of the country's population. So, managing them becomes important because they have an enormous business. Codes like National Industrial Classification Code (NIC Code) and Harmonised System Nomenclature (HSN) are tried to systematically check the business tax revenues, product pricing and taxation, etc. These codes are now required to establish small businesses and the proper implementation of GST. It significantly reduces retailers' workload, such as general store owners, because the categories aid in the placement of the correct products.
Did you know?
In their media release 4 (2014 series) dated 26 June 2014, the Dept of Policy and Promotion decided to switch from the NIC 1987 version to the NIC 2008. And since then, all Indian companies have been advised to adhere to NIC 2008.
NIC 2008 is more consistent with the international classification system, allowing the registration compliance processes to run smoothly.
What Is NIC Code?
The National Industrial Classification Code (NIC Code) is a statistical standard used to create and maintain a similar database for various economic activities. This code was created to determine and analyse how each economic activity contributes to national wealth.
Where Is It Used?
NIC codes is the official codes given to a product and used for various purposes, including
To apply for enrollment as a micro, small, or moderate business, go to the Udhyam portal. The Micro, Small, and Mid Enterprise Development Act governs it (2006). Furthermore, when trying to register on the Udhyam portal, you must provide your NIC code.
Formation of a Company and LLP
To be formed, a company or a limited liability partnership (LLP) must be enrolled on the MCA (Ministry of Corporate Affairs) portal. Furthermore, the NIC code of the company is required for enrollment.
Importance of NIC Code
Here is a list of key points indicating the significance of the NIC code.
- Most Indian government agencies use it to ensure that companies are classified easily. It is also used to keep track of a company's commercial pursuit.
- To obtain a Udyog aadhaar to register a corporate entity or a limited partnership.
- Once your company has been NIC-registered, you will easily access all government benefits.
- If you've registered for NIC, include it in all of your receipts so the government keeps track of your business.
How to Find NIC Code?
To find the NIC code, one needs to visit the website https://msmeregistrar.org. This website is a government official website that lists several products with different codes.
How to Generate Udyog Aadhaar NIC Code?
All medium-sized businesses require a Udyog Aadhaar issued by the Indian Government's Micro, Small, and Medium Businesses ministry. This 12 digits unique identification amount is used to assign a NIC code to a medium or small business.
What Is HSN Code?
HSN codes stand for Harmonised System Nomenclature, where businesses with an income of ₹5 crores or more will be required to provide a six-digit HSN or border tax code on invoices issued for goods of taxable services. Those with a previous fiscal year turnaround of nearer to ₹5 crores would also be required to provide a four-digit HSN software on B2B invoices.
The World Customs Organisation introduced this in 1988. (WCO). It was introduced to allow for the systematic classification of domestic and international goods. It is a six-digit code used to categorise various products. Since 1986, India has used HSN codes to classify goods and services for Custom and National capital Excise. HSN code is commonly used in customs and GST. The codes specified in the Tariff Act are also used for GST purposes. HSN is commonly used around the world. Different commodities have different HSN codes. HSN codes eliminate the need to publish product information, making GST returns easier to file.
It classified more than 5000 products, and the public accepted it. Also, It is organised in a legal and rational system for achieving uniform classification. It is required for B2B and B2C tax receipts on Goods and Services supplied.
A History on HSN
Since 1971, India has been a World Customs Organisation (WCO) member. Initially, it used 6-digit HSN rules to classify goods and services for Customs and Excise. Customs and National capital Excise added later two more digits to the codes to make them more concise, resulting in an 8-digit classification.
Who Needs HSN Codes?
HSN codes have long been used by manufacturers, importers, and exporters. Even before the GST regime, manufacturers were providing these codes. Importers and exporters have provided these codes in their exports and imports documents. Traders would primarily use HSN codes found on receipts supplied by makers, or import-export suppliers are more likely to be used by traders. Dealers with a turnaround of fewer than ₹1.5 crores are exempt from using HSN codes for their commodity markets. For commodities, businesses with an income of between ₹1.5 crores and ₹5 crores must mention only two digits of the HSN codes.
Understanding the HSN Code
The HSN code is divided into 21 sections, subdivided into 1244 sections. HSN codes with six digits are commonly used for goods and customs and GST use similar HSN codes. HSN codes with six digits are commonly used for goods, and customs and GST use similar HSN codes. HNS codes are commonly described in the Customs Tariff as the heading of 4 digits, subheading of 6 digits, and tariff items of 8 digits.
Where Are HSN Codes Used?
Various services are also uniformly classified for recognition, measurement, and taxation. Services Accounting Codes, or SACs, are codes for services. Animal products, industrial minerals, plastic articles, footwear, arms and ammunition, and machinery require an HSN code.
Let us consider the HSN code for the retail clothing industry, which is 69.16.92. Here 69 describes the amount for articles of apparel and fashion accessories that are not knitted or doilies, 16 represents the moving number for garments, and the last two digits, 92, are the product code for clothes are made of other textile materials.
Because businesses are critical to a nation's progress, managing them becomes an important task, maintained by the NIC code for smaller companies and the HSN code for major corporations. Also, the government is currently planning to release a few schemes for MSME underneath the Udyog Aadhaar scheme, from which you can easily benefit. These codes are intended to maintain an organised check on the business, tax revenues, product pricing and taxation, etc. Because the classifications aid in placing the correct products, it markedly reduces the burden of retail outlets such as general store owners. As a result, you should now have understood the meaning of NIC. Do you have issues with payment management and GST? Install the Khatabook App, a friend-in-need and one-stop solution for all issues related to income-tax or GST filing, employee management and more. Try it today!