A unified international classification system for goods and services, the Harmonized System (HSN) is crucial for regulatory, tax, and commercial purposes. Businesses and merchants can more precisely classify goods and services in India by using the HSN code system for GST categorization. HSN Code 5109 is one such code that applies to yarn composed of wool or fine animal hair that is particularly offered for retail sale. In the textile sector, this category is essential, especially for companies that sell yarn products made from wool.
Understanding HSN Code 5109
Yarn that is predominantly composed of wool or fine animal hair and packaged for retail sale is classified using HSN Code 5109. Usually offered in lower numbers, these yarns are intended for end users rather than large-scale industrial application. The code falls under the HSN classification’s Chapter 51, which deals with different types of animal hair, wool, and their derivatives.
Several yarn varieties, such as those derived from cashmere, alpaca, and other fine animal hairs, fall under this category. Since wool yarns are used to make a variety of goods, including upholstery, home textiles, clothes, and more, they are very important in the textile industry.
What Products Fall Under HSN Code 5109?
1. Wool Content: The yarn must consist primarily of wool or fine animal hair, and the wool content should typically be at least 85% by weight.
2. Retail Packaging: The only differential feature under this category is retail packaged yarn. It has been packed undeclared quantities meant for usually one household use.
3. Yarns: Not limited to worsted yarns or fine wool yarns, yarns covered under HSN Code 5109 could also include fine specialty yarns such as cashmere yarn. Cashmere, which is obtained from cashmere goats, forms one of the finer yarns that denote luxury. This yarn is much softer and even more expensive than normal wool and hence very much desired for premium apparel.
Importance of HSN Code 5109 in Trade
HSN Code 5109 plays a significant role in global trade, especially for businesses involved in the wool or textile industries. Here’s why it is important:
- Trade Classification: For international trade, accurate classification of products ensures smoother customs processes. Importers and exporters use HSN codes to correctly declare their goods and avoid disputes or delays. Knowing which products fall under HSN Code 5109 ensures compliance with international standards and trade laws.
- GST Compliance: In countries like India, the HSN Code 5109 helps businesses calculate the correct Goods and Services Tax (GST) rates. Goods under this code generally attract a GST rate of 5%, which is applicable to most yarns put up for retail sale. Proper classification under this HSN code helps businesses avoid GST tax-related issues and helpful for correct GST return filing online.
- Inventory Management: Retailers and manufacturers often rely on these codes to categorize and manage their inventory. They also use HSN codes for stock keeping units (SKUs), helping businesses track product sales, manage stock levels, and streamline supply chains.
- Pricing and Duties: When importing yarns or raw materials into a country, the HSN code ensures that the correct import duties are levied based on the product’s nature and value. This classification helps businesses anticipate costs, calculate profit margins, and make informed pricing decisions.
Key Components of HSN Code 5109
The HSN Code 5109 is broken down further into more specific subcategories, based on the type of wool or fine animal hair, the yarn’s structure, and its intended use. The primary subcategories under HSN Code 5109 include:
| Subcategory | Description | Examples of Materials | Applications |
| 510910 | Wool yarn, carded or combed, packaged for retail sale | Regular wool yarn | Sweaters, scarves, gloves |
| 510920 | Fine animal hair yarn, carded or combed, packaged for retail sale | Cashmere, alpaca, angora | Luxury fashion items, accessories |
| 510990 | Other wool or fine animal hair yarn, packaged for retail sale | Wool blends, other fine hair yarns | Home textiles, crafting, DIY |
This table provides a clear overview of the types of yarn under HSN Code 5109 and their respective applications.
Applications of Yarn Under HSN Code 5109
The yarns classified under HSN Code 5109 have a wide array of applications in both the fashion and home textile industries. The key applications include:
- Fashion Industry: Wool yarn is widely used in the production of high-quality garments such as sweaters, scarves, gloves, hats, and jackets. Fine animal hair yarns like cashmere are particularly valued for luxury fashion products, offering exceptional softness and warmth.
- Home Textiles: Retailers also sell wool and fine animal hair yarns for making home textile products such as blankets, rugs, upholstery, and wall hangings. These products are known for their durability and warmth, making them popular in colder climates.
- Crafting and DIY Projects: Hobbyists and crafters frequently purchase yarn under HSN Code 5109 for knitting and crocheting their own garments or home decor items. The diverse colors and textures available in wool and fine animal hair yarns make them ideal for a variety of crafting projects.
- Industrial Uses: While HSN Code 5109 primarily applies to retail packaging, wool and fine animal hair yarns are also used in more specialized industrial applications, such as textile manufacturing and automotive upholstery.
Conclusion
In summary, HSN Code 5109 is crucial for classifying wool and fine animal hair yarns intended for retail sale. It provides an organized system for businesses, enabling them to manage taxes, trade processes, and inventory efficiently. For industries dealing in high-quality yarns such as wool, cashmere, and other fine animal hairs, knowing and applying the correct HSN code is essential for smooth business operations.
As global trade continues to evolve, accurate product classification under HSN Code 5109 will remain a significant factor for businesses in the textile and yarn industries, helping them stay compliant with international trade regulations and GST requirements.
FAQs : HSN Code 5109 and GST rate
1. What are the GST rates applicable to products under HSN Code 5109?
The GST rate for products classified under HSN Code 5109 generally falls into the 5% category. However, variations may apply depending on specific product usage or combinations with other materials. Always check updated GST guidelines.
2. What types of products are included under HSN Code 5109?
Products under this code include:
- Wool yarn.
- Fine animal hair yarn (e.g., mohair or cashmere).
- Hosiery wool yarn put up for retail sale.
3. How do I classify a product under HSN Code 5109?
Answer:
To classify a product under HSN Code 5109:
- Verify that it consists of 85% or more by weight of wool or fine animal hair.
- Ensure it is packaged for retail sale.
- Determine the intended end-use, such as garment-making.
4. Are there exemptions or special provisions for HSN Code 5109 products?
Certain handcrafted or artisan yarns may qualify for exemptions based on government policies aimed at promoting small-scale industries. Additionally, some export-specific rules might provide tax benefits.
5. What documentation is needed for trade involving HSN Code 5109 products?
Answer:
For trade or export:
- Provide a product specification sheet detailing the composition.
- Include a GST-compliant invoice.
- Attach relevant certifications if claiming exemptions.
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