SKU and HSN

By -
When you create items of your inventory in systems like Zoho , you are asked to enter the SKU, Unit and HSN code of the item. Let us try to understand these terms and their use in this blog.
Try one month free Zoho Books

SKU ( Stock keeping Unit)

The name may suggest that this is the unit in which this item are kept at warehouse or store. For example, a store may sell beer in the unit of cans but will purchase and may wish to maintain the record in inventory in the unit of crates. The name is a misnomer.

SKU is essentially an Identification, of a particular item that allows to be tracked for inventory purpose.SKU is usually alphanumeric. For example, an Ice candy of large size in orange flavor may have an SKU as 155-LAR-ORA. Here 155 is the code of manufacturer or brand of the Ice Candy , 'LAR' is for Large and 'ORA' for orange.

The point to be noted is that the business owner can create its own method of generating SKU. Same TV from a particular brand will have different SKU at different shops.

Unit

Unit is simply the smallest unit of measurement in which the business owner wants to maintain the inventory.

HSN (Harmonized System of Nomenclature)

In contrast to SKU, the HSN code of an item is unique. It is a systematic and standardized way to name and classify an item. It is usually used for determining the tax and duty rates. In India, the HSN code of an item is used to determine the tax rate for that particular item for GST (Goods and Services Tax).
It is by far the best logical system of classification and identification adopted for international trade.

Comments

Post a Comment

Popular posts from this blog

Normal scheme vs Composition scheme

By -
Every person who supplies taxable goods or services and turnover exceeds 20 lakhs needs to register under GST. For those who are supplying Goods, have option to opt for composition levy if turnover does not exceed 75 lakhs in a single financial year. Composition scheme has certain benefits such as: Lower returns to be filed and a single quarterly return instead of details of outward and inward supplies and monthly return, Need to issue bill of supply instead of Tax invoice, Lower rate of tax, However it also has disadvantages such as: No input credit is available on inward supplies, Can not charge tax in bill of supply, Input credit is not available to buyer or recipient of supplies Looking at advantages and disadvantages, we can broadly say that composition levy is beneficial for small traders who wants to avoid complexity and follow lesser compliance. But, it should be noted that composition levy should be opted only if you are into B2C segment. In B2B segmen...
Read more

Valuation of inventories under GST

By -
Image
Introduction The Goods and Services Tax (GST) introduced on 1st July, 2017. There are various impacts of GST on business activities, like change in invoicing process, change in accounting process, etc. It has impact on valuation of inventories also due to reverse charge mechanism on goods under GST. This document prescribes the accounting treatment of GST on inventories. As per Ind AS 2 and AS 2, inventories are assets held for sale in the ordinary course of business (trader), in the process of production for such sale or in the form of materials or supplies to be consumed in the production process (manufacturer) or in the rendering of services (service provider). Therefore, inventories can be classified into: ( i ) Stock-in-trade; ( ii ) Raw materials; ( iii ) Finished goods; and ( iv ) Spare parts Valuation of Inventories under GST ...
Read more