What is the HS code in shipping?
As you know, HS Codes stands for Harmonized System code and is also known as Harmonized Commodity Description and Coding System. It's a standardized numerical system to classify globally traded products.
Mainly Hs code is used by customs officials globally to identify items when assessing customs duties, and taxes and for gathering data or stats. This system is officially maintained by the World Customs Organization and the WCO updates the HS code system every five years.
Every time a commodity (an Item) enters international borders then first has to be declared to an HS code to the customs authorities. This helps in the commodity codes (product codes) globally.
Why are they important?
The HS code helps customs to track and classify to ship a particular product also it's a great way to calculate customs duties, and taxes and need to know about applying any restrictions.
If you want to ship an item but don’t include the HS code on the invoice and other shipping documents then it's a big risk of the receiver paying the wrong tax amount and could possibly delay the shipment or missout.
Also, the US uses a 10-digit code to classify items for shipping, known as a Schedule B number. The 10-digit code contains there the first six digits of the HS number.
HS Codes Structure?
The global HS Codes have four components (code made with 4 parts) are follows:
Suppose the code is: 0701, 15, 0080
1. Chapter: In this HS code, 07 is the chapter and 21 distinct sections that are divided into 96 chapters.
2. Heading: In this HS code, 0701 is the heading. The heading refers to the particular category within any particular chapter.
3. Subheading: 0701.15 is the subheading. The last two digits of the HS code are more specific, determined subcategories of items.
4. Extra digits: 0701.15.0080 is the extra digits. Many countries used additional two to four digits for country-specific categories.
How to use the HS Code?
- Classified physical items for shipment out of the country.
- Report shipment details in the AES when the cost is more than $2,500.
- Complete all required valid shipping documentation processes.
- Determine all import duty rates.
- Always do market research and stay updated with trade statistics.
- Stay focused and updated with shipment laws of different countries.