SAC codes organize services, and GST rates define tax percentages. Learn how these elements impact business compliance and pricing strategies in India
The SAC (Services Accounting Code) is used to identify the service category of a business. Under the Goods and Services Tax categorization, Services Accounting Codes (SAC Codes) 99851 are used for Recruitment and HR Services such as human capital search/referral service as well as labour supply services. So, in this post, we will explain the definition of the GST rate as well as the SAC codes and GST rate for recruitment and HR-related services.
What All Fall Under Group 99851 of the SAC CODE for Recruitment and HR Services
- Executive/retained personnel search services
- Permanent placement services, other than executive search services
- Contract staffing services
- Temporary staffing services
- Long-term staffing (payrolling) services
- Temporary staffing-to-permanent placement services
- Co-employment staffing services
- Other employment & labour supply services
SAC Codes for Services Falling Under Group 99851
| SAC CODE | Description |
| 9985 | Support services |
| 99851 | Employment services including personnel search/referral service & labour supply service |
| 998511 | Executive/retained personnel search services |
| 998512 | Permanent placement services, other than executive search services |
| 998513 | Contract staffing services |
| 998514 | Temporary staffing services |
| 998515 | Long-term staffing (payrolling) services |
| 998516 | Temporary staffing-to-permanent placement services |
| 998517 | Co-employment staffing services |
| 998519 | Other employment & labour supply services n.e.c |
Understanding GST Rules for Recruitment and HR Services
The percentage rate of tax levied on the sale of goods or services under the CGST, SGST, and IGST Acts is referred to as the GST rate. The GST rates are 5%, 12%, 18%, and 28%.
In addition to the threshold on annual sales turnover, the majority of recruitment service providers would also need to register for GST in the following situations –
- Even if the total annual income does not cross the threshold prescribed by the GST council, a company must register for GST if it engages in interstate commerce.
- A person who occasionally engages in commercial operations involving the provision of HR and recruitment services, as principal, agent, or in any other capacity, in a State or a Union territory where he does not have an established place of business must undergo GST Registration as he is considered a casual taxable person. A majority of independent contractors fall under the category of casual taxpayers. Therefore, such individuals would need to register for GST.
- A non-resident taxable person in India is defined as any individual who engages in transactions involving recruitment and HR services periodically, whether as a principal, agent, or in any other capacity, but does not have a fixed place of business or residence in the country. Given this definition, all foreign freelance recruiting service providers operating in India must undergo GST registration to comply with the local tax regulations. This registration is crucial as it legitimizes their operations and ensures they adhere to the GST framework, which governs all taxable transactions within the country.
SAC Code and GST Rate for Recruitment and HR Services
According to the GST council’s most recent news, the tax structure for recruitment and HR-related services is as follows:
| SAC CODE | Description | GST Rate |
| 9985 | Support services | 18% |
| 99851 | Employment services including personnel search/referral service & labour supply service | 18% |
| 998511 | Executive/retained personnel search services | 18% |
| 998512 | Permanent placement services, other than executive search services | 18% |
| 998513 | Contract staffing services | 18% |
| 998514 | Temporary staffing services | 18% |
| 998515 | Long-term staffing (payrolling) services | 18% |
| 998516 | Temporary staffing-to-permanent placement services | 18% |
| 998517 | Co-employment staffing services | 18% |
| 998519 | Other employment & labour supply services n.e.c | 18% |
The Role of SAC Codes and GST Rates
In the intricate web of Indian taxation, two key elements wield significant influence: SAC (Services Accounting Code) and GST (Goods and Services Tax) rates. SAC codes act as a classification system for various services, streamlining reporting and compliance. Meanwhile, GST rates, spanning from 0% to 28%, determine the tax percentage applied to diverse goods and services.
Understanding SAC codes is imperative for businesses, ensuring accurate service categorization and adherence to taxation norms. This classification simplifies reporting, fostering a standardised approach in the complex world of taxation.
GST rates, assigned based on service or product types, directly impact tax liabilities, influencing pricing strategies and consumer costs. Staying abreast of GST rate changes is vital for businesses to navigate the dynamic tax landscape effectively.
In summary, SAC codes and GST rates collectively shape the taxation framework, influencing business operations, pricing dynamics, and the broader economic landscape in India.
Conclusion
Recruiting and HR services are both subject to an 18% GST charge. The aforementioned services are not on the list of services that are exempt from GST: https://reg.gst.gov.in/registration/. Since the GST Council has refrained from specifying the specific rates for the Group 99851 services, they are charged at the default GST rate of 18% applicable to all services.
Before registering for GST, calculate the GST amount to be paid using our GST Calculator.
If you wish to know more about the SAC code for labour charges or SAC Code and GST rate for recruitment and HR services, get in touch with our capable experts who will be more than happy to assist you with all things GST-related. To know more, ask for a free consultation with our attorneys today!
FAQs
What is the SAC code for labour charges?
The SAC code for labour charges depends on the specific type of labour service provided. It could range from 998511 for executive search to 998519 for other employment and labour supply services.
What is the GST rate for HR consultancy services?
The GST rate for HR consultancy services is generally 18%. However, it's essential to classify the specific service accurately under the correct SAC code to determine the exact GST rate.
Is GST applicable to recruitment services?
Yes, GST is applicable to recruitment services. The GST rate depends on the specific type of recruitment service provided and its corresponding SAC code.
What is the HSN code for a manpower recruitment agency?
There's no HSN code for services. HSN codes are for goods, not services. For services, you use SAC codes.
What is the GST rate for manpower services?
The GST rate for manpower services typically falls under the 18% bracket. However, the exact rate depends on the specific nature of the manpower service and its classification under the correct SAC code.
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