All tax invoices generated by the suppliers of goods and services under GST law must include the appropriate HSN code or SAC code. The SAC code is the "Service Accounting Code" and was first established by the Service tax department. Later, GST also adopted SAC. However, both apply to website and software development services.
The Services Accounting Code (SAC) is a system of classification used to identify and categorise services under the Goods and Services Tax (GST) regime in India. Similar to the Harmonised System of Nomenclature (HSN) used for goods, SAC codes are designed to standardise the classification of services for taxation purposes. Each service is assigned a unique HSN SAC Code, which helps in accurate tax calculation, compliance, and reporting. This standardised system facilitates easier identification of services, aids in claiming Input Tax Credit (ITC), and simplifies documentation for both domestic and international trade.
SAC for Management Consulting/Services; Information Technology Services
Group 99831 of the SAC codes deals with management consulting and management services or information technology services, including website and software development. Website and software development comes under the SAC code 998314 for the category of Information technology (IT) design and development services. The HSN SAC Code allotted for the various services are as follows:
| Group 99831 | Management consulting/Services; Information technology services |
| 998311 | Services including financial, human resources, strategic operations, marketing and supply chains, etc. |
| 998312 | Business consulting services – Public relations services |
| 998313 | IT (Information Technology) consulting and support services |
| 998314 | IT design and development services |
| 998315 | Hosting and IT infrastructure provisioning services |
| 998316 | Network management and IT infrastructure |
| 998319 | Other IT services |
How Are SAC Codes Derived
The Service Accounting Code is generated using a standard format. For services, the first two numbers are always 99. Therefore, the main service type in this example, Other professional, technical, and business services, is represented by the next two figures, 83.
The next two digits, 14, stand for the specific type of service, for example, design and development services for information technology (IT).
What Does SAC code- 998314 Include?
The SAC code 998314 for the category of Information technology (IT) design and development services includes the following:
- Provides technical know-how to create or construct an IT solution, including specialized programs, networks, and computer systems.
- Services that create the framework or write the computer code required to create or implement a software application. For example, designing a webpage, database, etc.
- Network security design and development services, such as designing, developing, and implementing software, hardware, and procedures to control access to data and programs and to enable the secure exchange of information over a network, such as intranets, extranets, and virtual private networks.
- Services determining a company’s computer needs, offering advice on hardware and software purchases, creating system specifications, and installing the new system are there in the 998314 HSN SAC Code
- Services, such as an evaluation of the client’s current computer system, current and future computing needs, the acquisition of new hardware and software, and the fusion of the new and old system components to produce a new integrated system are also a part of 998314 SAC Code
- The original software may be licensed as intellectual property and protected as a collection of instructions to be utilized in a computing system to achieve a certain effect. Make Quick Online GST Account Login from the User Friendly Portal.
What Does 998314 SAC Code Not Include?
- Web page hosting agreements that include both the design and development of the web page: – 998315.
- Service agreements that combine application design and development with ongoing hosting and administration of the application: – 998315.
- Software services for retail and wholesale sales: 996111, 996211
- Contracts for services where the hosting and continuous operation of the application are included with the design and development of the application: – 998315.
- The daily network management services for the client’s network: – 998316.
HSN Code and GST Rate on Software and Software Services
| HSN Code | Description | GST Rate |
| 49119910 | Printed hardcopy of computer software | 12% |
| 85232990 | Other devices for recording sounds | 18% |
| 85238020 | Discs containing information technology software | 18% |
| 85238090 | Other types of discs | 18% |
| 85243111 | Discs with information technology software (exempt) | 0% |
| 85244011 | Magnetic tapes with information technology software (exempt) | 0% |
| 85249112 | Information technology software on disc or CD-ROM (exempt) | 0% |
| 99831 | Management consulting and management services; IT services | 18% |
| 998311 | Management consulting in finance, strategy, HR, marketing, operations, and logistics | 18% |
| 998312 | Enterprise advisory services, including public relations consultancy | 18% |
| 998313 | IT guidance and maintenance services | 18% |
| 998314 | Designing and formulating IT solutions | 18% |
| 998315 | IT system hosting and infrastructure setup services | 18% |
| 998316 | Management of IT systems and networking | 18% |
| 998319 | Additional IT-related services not classified elsewhere | 18% |
SAC Code for Technology Consulting Services
When just technical consulting services are offered and software development or design is excluded, then social media marketing firms, freelancers, digital marketing agencies, and agencies use HSN SAC Code 998313 to bill for their services. The GST tax rate applied to technology consulting services is 18%.
What Is Included in 998313 SAC Code?
The SAC code 998313 is for information technology (IT) consulting and support services under the Goods and Service Tax categorization. This type of service is taken as other corporate, technical, and professional services, and they include the following:
- Provide guidance or a professional opinion to the clients on technical issues relating to the use of information technology, such as guidance on hardware and software requirements and procurement, systems integration, systems security, or the provision of expert testimony on IT-related issues.
- Provide backup computer equipment and duplicate software in a different location to enable a client to relocate regular staff to resume and maintain routine computerized operations in the event of a disaster like a fire or a flood.
- Provides technical expertise to help a client with specific computer-related issues such as auditing, assessing, and documenting a server, network, or process for components, capabilities, performance, or security.
- Provides technical expertise to solve issues with the software, hardware or an entire computer system.
What Does SAC Code 998313 Not Include?
- Giving suggestions, direction, and operational help regarding how firms employ information technology, such as creating an e-commerce strategy: – 998311
- Consulting the relevant information technology (IT) design and development service under service agreements where guidance combines with the design and development of an IT solution – 998314 SAC Code
Breaking up of SAC Code
The HSN SAC Code(Services Accounting Code) is a 6-digit code used to classify services for invoicing and taxation purposes under the GST (Goods and Services Tax) system in India. The first two digits of the SAC are always “99,” the next two digits represent the major nature of the service, and the last two digits represent the detailed nature of the service. For example, SAC code 9954 is broken down as follows:
- 99: Common for all services
- 54: General construction services
Each specific type of service is further classified under the detailed nature of the service.
For instance, SAC Code 995428 represents “General construction services of other civil engineering works n.e.c.,” and SAC Code 995429 represents “Services involving Repair, alterations, additions, replacements, renovation, maintenance or remodelling of the constructions covered above”
What is the Difference Between HSN SAC Code?
The SAC (Services Accounting Code) and HSN (Harmonized System of Nomenclature) codes are both classification systems used for tax purposes under the Goods and Services Tax (GST) in India. Here are the key differences between SAC and HSN codes:
| S.No. | Parameters | HSN | SAC |
| 1. | Full Form | The system of naming is known as the Harmonised System. | Services Accounting Code |
| 2. | Structure | The Harmonised System of Nomenclature helps determine the GST rates applicable to goods. | SAC codes aid in determining GST rates specific to services. |
|
HSN Code Structure First two digits: Chapter Next two digits: Heading Next two digits: Subheading Final two digits: Product code |
SAC Code Structure: First two digits: Major service category Next two digits: Specific service Final two digits: Sub-service |
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| 3. | Issued by | The World Customs Organization (WCO) has released HSN codes. | The Central Board of Indirect Taxes and Customs (CBIC) has issued SAC codes. |
| 4. | Used for | 8-digit code | 6-digit code |
| 5. | Nature of Classification | Used to classify goods | Used to classify services |
| 6. | Number of Digits | Eight digits | Six digits |
| 7. | Example |
Product: Mobile phone HSN Code: 8517.12.00 First two digits (85): Electrical machinery and equipment (chapter) Next two digits (17): Telephone sets (heading) Next two digits (12): Mobile phones (subheading) Final two digits (00): Product code |
Service: Software development SAC Code: 998314 First two digits (99): Information Technology (major service category) Next two digits (83): Software development (specific service) Final two digits (14): Custom software development (sub-service) |
Understanding and correctly applying HSN SAC Code are crucial for businesses to comply with GST regulations and ensure accurate tax reporting for services and goods, respectively. For businesses to adhere to these requirements effectively, obtaining GST registration is fundamental. This registration not only facilitates the legal use of SAC and HSN codes but also enables businesses to manage their tax liabilities properly under the GST framework, ensuring compliance and streamlined operations.
Benefits of HSN SAC Code for the Businesses in India
The use of HSN SAC Code provides several benefits for businesses in India, especially under the Goods and Services Tax (GST) regime. Here are the key advantages:
| Benefits | SAC Codes | HSN Codes |
| Standardisation | Ensures uniformity in classification of services | Ensures uniformity in classification of goods |
| Compliance | Facilitates accurate tax calculation and reporting | Facilitates accurate tax calculation and reporting |
| Tax Credits | Helps in claiming Input Tax Credit (ITC) | Helps in claiming Input Tax Credit (ITC) |
| International Trade | Simplifies international trade documentation | Simplifies international trade documentation |
| Market Understanding | Aids in market analysis and understanding customer needs | Aids in market analysis and understanding customer needs |
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HSN Code for Software
Software development is viewed as a service if the process is carried out and provided as a service, such as through the SAAS model. Selling software when the developer has finished developing it and makes it available on a CD, DVD, or USB device is seen as the delivery of products.
The HSN code (Harmonized System of Nomenclature code) must be included on the tax invoice in this situation since the HSN SAC code is not relevant. For the services under 998314 SAC Code, the HSN Code Check for those services will be the same; for example, the digital marketing HSN code and social media marketing services HSN code will be 998314.
Conclusion:
Under the GST act, all tax invoices from suppliers of goods and services must include the proper HSN SAC Code. The SAC code is the “Service Accounting Code” and was first established by the service tax department. Later, GST adopted SAC; both apply to website and software development services.
The SAC code for website and software development is 998314, which deals with management consulting or information technology services, including website and software development.
Many services come under a particular HSN SAC code. However, there are other services as well which are not a part of a particular SAC code. In some software development cases, an appropriate HSN code must be mentioned in the tax invoices where SAC codes might seem invalid for certain services.
Therefore, understanding all HSN SAC Code is necessary to ensure compliance with the GST act. To know more about SAC codes for goods and services, speak to an expert at Vakilsearch and get all the valuable insights on GST compliance.
Frequently Asked Questions on HSN SAC Code
What is the SAC code for software development services?
The SAC (Services Accounting Code) for software development services in India is 998313. This code serves to categorise services specifically related to the development, customisation, and modification of software products. It facilitates streamlined taxation procedures by providing a standardised classification system for such services, ensuring regulatory compliance and efficient business operations.
What is SAC code for an IT consulting Service?
The SAC (Services Accounting Code) for IT consulting services in India is 998319. This code encompasses services related to providing advice, guidance, and expertise in the field of information technology. It assists in accurately categorising such consulting services for taxation purposes, ensuring compliance with GST regulations and facilitating smooth business operations.
What is SAC code 998312?
SAC code 998312 pertains to maintenance and repair services of commercial and industrial machinery. This code is used to classify services related to the upkeep, servicing, and restoration of machinery used in commercial and industrial settings. It assists in accurately categorising these maintenance services for taxation purposes, ensuring compliance with GST regulations and facilitating efficient business operations.
What is the HSN code for computer installation?
The HSN code for computer installation services is 998733. This code specifically covers the installation of office, accounting, and computer machinery.
The SAC code for software maintenance services is 996103. This code applies to the ongoing upkeep and support provided for software products.
What is SAC for maintenance or repair service?
The SAC code for general maintenance or repair services, which includes computer maintenance and repair, is 999999. This is a residual code used when a more specific code isn't available.
What is the SAC code for software development services?
The SAC code for software development services is 996101. This covers the creation of new software or modifications to existing software.
What is the GST rate for software development services?
The GST rate for software development services in India is 18%.
