Architects & engineers, unlock GST secrets! Find the right SAC code & 18% (or maybe 5%-12%) rate for your services. Read now!
SAC codes, a key part of the GST system, categorize services for tax purposes. Architects and engineers in India must use specific SAC codes for their services, which determine the applicable GST rate (0%, 5%, 12%, 18%, or 28%). This article provides a comprehensive guide to GST rate and SAC code for architects and engineers.
GST Rate for Architects and Engineers
In India, the Goods and Services Tax (GST) applies to various services, including those provided by architects and engineers. Understanding the applicable GST rate and SAC Code is crucial for these professionals to comply with tax regulations.
General GST Rate for Architects and Engineers:
- 18% is the standard GST rate and SAC code applicable to most architectural and engineering services in India. This applies to services like:
- Architectural design and planning
- Structural engineering
- Civil engineering
- Electrical engineering
- Mechanical engineering
- Plumbing and drainage design
- Landscape architecture
- Project management and consultancy
Reduced GST Rates for Specific Services:
- 5% GST rate may apply to certain services related to residential construction and historical restoration projects, depending on specific conditions.
- 12% GST rate may apply to some services related to infrastructure development projects undertaken by the government or government agencies.
Determining the Correct GST Rate:
- The specific SAC code assigned to the service determines the applicable GST rate. Architects and engineers should consult the official SAC code list issued by the Central Board of Indirect Taxes and Customs (CBIC) to identify the correct code for their services.
- Some common SAC codes for architectural and engineering services include:
- 998321 – Architectural Advisory Services
- 712000 – Engineering Services for Construction Projects
- 711000 – Architectural Services
- 713000 – Technical Testing and Analysis Services
Obtaining GST Registration:
- Architects and engineers providing taxable services under GST are required to obtain GST registration. This applies to businesses with an annual turnover exceeding Rs. 20 lakhs (Rs. 40 lakhs for some specified states).
Compliance and Filing Requirements:
- Registered architects and engineers must file regular GST returns and pay the applicable tax liabilities.
- They should also maintain proper records of their transactions and invoices to comply with GST regulations.
Staying Updated:
- GST rates and regulations are subject to change periodically. Architects and engineers should stay updated on the latest developments to ensure compliance and avoid any penalties.
SAC Code for Engineering Services
GST rates are not included in this table as they can vary depending on the specific service and project type. Always refer to the official SAC code list and consult with a tax expert for accurate GST rate information.
| Service Category | SAC Code | Description |
| Architectural Services | 998321 | Architectural advisory services |
| Architectural Services | 998322 | Architectural services for residential building projects |
| Architectural Services | 998323 | Architectural services for non-residential building projects |
| Architectural Services | 998324 | Historical restoration architectural services |
| Architectural Services | 998325 | Urban planning services |
| Architectural Services | 998326 | Rural land planning services |
| Architectural Services | 998327 | Project site master planning services |
| Architectural Services | 998328 | Landscape architectural services and advisory services |
| Engineering Services | 998331 | Engineering advisory services |
| Engineering Services | 998332 | Engineering services for building projects |
| Engineering Services | 998333 | Engineering services for industrial and manufacturing projects |
| Engineering Services | 998334 | Engineering services for transportation projects |
| Engineering Services | 998335 | Engineering services for power projects |
| Engineering Services | 998336 | Engineering services for telecommunications and broadcasting projects |
| Engineering Services | 998337 | Engineering services for waste management projects (hazardous and non-hazardous), for water, sewerage and drainage projects |
| Engineering Services | 998338 | Engineering services for other projects |
| Engineering Services | 998339 | Project management services for construction projects |
Applicability of GST on Different Architectural and Engineering Services
The applicability of GST on different architectural and engineering services can be complex, depending on the specific nature of the service provided and any potential exemptions. Here’s a breakdown of how GST applies to various scenarios:
General Rule:
- Most architectural and engineering services in India are subject to a 18% GST rate. This includes services like architectural design, structural engineering, electrical engineering, plumbing engineering, and project management.
Exemptions:
- Comprehensive architectural services: If you provide a complete package of architectural services for a single project, including design, preparation of drawings, and supervision of construction, this may be considered a “composite supply” and be exempt from GST under notification 12/2017. However, consult a tax professional for confirmation.
- Services to government: Services provided to the Government of India or any State Government are exempt from GST.
- Specific services: Certain specific services listed in Notification 12/2017 are exempt from GST, such as surveying and mapping services, land development services, and certain feasibility studies.
Factors to Consider:
- Nature of the service: The specific type of service provided will determine whether it falls under the general 18% GST rate or qualifies for an exemption.
- Value of the supply: If your annual turnover exceeds the threshold limit (Rs. 20 lakhs in most states), you are required to register for GST even if you provide exempt services.
- Place of supply: The location of the service recipient and the service provider determines the applicability of GST.
You can find a detailed list of SAC (Service Accounting Code) codes for architectural and engineering services in the notifications issued by the GST Council. It’s always advisable to consult with a tax professional for specific guidance on the applicability of GST to your business, as interpretations can be nuanced. Talk to our GST experts at Vakilsearch and learn more!
GST Implications for Architects and Engineers
The Goods and Services Tax (GST) has significantly impacted the way architects and engineers do business in India. Here’s a breakdown of the key implications:
Registration and Filing:
- Registration: Architects and engineers whose annual turnover exceeds the threshold limit (Rs. 20 lakhs in most states) are required to register for GST.
- Filing Returns: Registered architects and engineers must file GST returns regularly, including GSTR-3B (monthly/quarterly), GSTR-1 (based on turnover), and GSTR-2 (details of inward supplies).
Taxation:
- General Rate: Most architectural and engineering services are subject to a 18% GST rate. This includes design, engineering, project management, and other related services.
- Exemptions: Certain services are exempt from GST, such as:
- Comprehensive architectural services: A complete package for a single project, including design, drawings, and construction supervision, may be exempt.
- Government services: Services provided to the central or state governments are exempt.
- Specific services: Surveying, mapping, land development, and certain feasibility studies are exempt.
Input Tax Credit:
- Architects and engineers can claim an input tax credit (ITC) on eligible purchases of goods and services used for providing their services. This can help reduce their overall GST liability.
Other Considerations:
- Place of Supply: The location of the service recipient and provider determines the applicability of GST.
- Reverse Charge Mechanism: In certain cases, the recipient of the service may be responsible for paying the GST instead of the supplier.
- Record Keeping: It’s crucial to maintain proper records of invoices, receipts, and other documents to comply with GST regulations.
Impact on Business:
- Increased Compliance Burden: GST registration and filing requirements can add to the administrative workload for architects and engineers.
- Cost Implications: The 18% GST rate can increase the cost of services for clients.
- Competitive Advantage: Architects and engineers who can efficiently manage their GST compliance and utilize ITC effectively may gain a competitive edge.
Compliance Requirements for Architects and Engineers under GST
Registration:
- Threshold Limit: Architects and engineers with an annual turnover exceeding Rs. 20 lakhs (in most states) are required to register for GST.
- Exemptions: Certain categories like sole proprietors with turnover below the threshold and suppliers to SEZs are exempt from registration.
Returns:
- GSTR-3B: Registered architects and engineers must file this monthly/quarterly return by the 20th of the next month. It summarizes the total taxable turnover, tax liability, and input tax credit claimed.
- GSTR-1: This monthly/quarterly return by the 10th of the next month details all outward supplies made during the period.
- GSTR-2: This monthly return by the 15th of the next month details all inward supplies received during the period.
- Annual Return: An annual return summarizing the entire financial year’s GST transactions must be filed by December 31st of the subsequent year.
Record Keeping:
- Maintain proper records of invoices, bills of sale, receipts, payment vouchers, and other documents related to your business transactions for at least 5 years.
- These records are essential for verifying your GST returns and claiming input tax credit.
Other Requirements:
- Electronic Invoice Generation: If your annual turnover exceeds Rs. 100 crores, you must issue electronic invoices for all B2B transactions.
- Reverse Charge Mechanism: In certain situations, the recipient of the service (e.g., government departments) might be responsible for paying the GST instead of the supplier.
- Payment of Tax: GST liability on outward supplies must be paid by the due date specified in the GSTR-3B return.
- Place of Supply: Determining the place of supply is crucial for identifying the applicable GST rate and jurisdiction.
- SAC Codes: Use the correct Service Accounting Code (SAC) for your services to ensure accurate tax calculations and reporting.
- Input Tax Credit: Claim eligible ITC on purchases used for providing your services to reduce your overall GST liability.
- Compliance Audits: The tax authorities may conduct audits of your business records to verify your compliance with GST regulations.
FAQs
What is the GST rate for architects and engineers in India?
The general GST rate for most architectural and engineering services in India is 18%. This applies to services like design, construction, project management, and related activities.
What is the SAC code for architectural services?
There are several SAC codes for different types of architectural services: 998321: Architectural advisory services 998322: Architectural services for residential building projects 998323: Architectural services for non-residential building projects 998324: Historical restoration architectural services 998325: Urban planning services 998326: Rural land planning services 998327: Project site master planning services 998328: Landscape architectural services and advisory services
What is the SAC code for engineering services?
Similar to architectural services, there are various SAC codes for different engineering services: 998331: Engineering advisory services 998332: Engineering services for building projects 998333: Engineering services for industrial and manufacturing projects 998334: Engineering services for transportation projects 998335: Engineering services for power projects 998336: Engineering services for telecommunications and broadcasting projects 998337: Engineering services for waste management projects, water, sewerage, and drainage projects 998338: Engineering services for other projects 998339: Project management services for construction projects
What are the GST implications for architects and engineers?
Several key implications exist for architects and engineers under GST: Registration: Most with annual turnovers exceeding Rs. 20 lakhs need to register for GST. Filing Returns: Registered professionals need to file regular returns like GSTR-3B, GSTR-1, and GSTR-2. General Rate: Most services attract a 18% GST rate. Exemptions: Certain services like comprehensive architectural packages and services to the government are exempt. Input Tax Credit: Architects and engineers can claim ITC on eligible purchases to reduce their GST liability. Record Keeping: Maintain proper documentation for at least 5 years for verification and claiming ITC. Other Requirements: Electronic invoice generation for B2B transactions above Rs. 100 crores, potential reverse charge mechanism, timely tax payment, etc.
