What is SAC Code in GST with its Uses & Benefits

SAC Code In GST

When Goods and Services Tax was introduced, the Central Board of Indirect Tax and Customs (CBIC) made things easier by introducing the HSN with its classification and SAC (Services Accounting Code) code systems. These codes help identify different services and their corresponding GST rates, making it easier to calculate the right amount of tax.

What do you understand by SAC Code?

The full form of SAC Code is Servicing Accounting Code. SAC code system applies to all the services provided within India. This system helps in identifying, categorizing, measuring and deciding the applicability of GST on services in India.

SAC (Services and Accounting Code) codes are derived from the internationally recognized Harmonized System of Nomenclature, which is a global system used for classifying and coding all products worldwide. This system supports the compliance of GST based on international standards. It will provide a common framework to the government for the proper collaboration of data related to sales and purchases and analyze the same. Businesses make use of SAC codes to submit their GST returns and fulfill their tax obligations to the government.

What is the SAC Number?

Under GST, a SAC code consists of six digits. Breaking up the 6-digit SAC is as follows:

• The first two digits in SAC are the same for all services i.e. 99 as services are covered under Chapter 99
• The middle two digits represent the major nature of services
• The last two digits represent the detailed nature of services

For Example, SAC for Information Technology IT Design and Development Services which is commonly called as software development is 998314 which is derived as follows:

• The first two digits in SAC are the same for all services i.e. 99.
• The middle two digits indicate the major nature of services, in this case IT services.
• The last two digits represent the detailed nature of services, in this case Design and Development services.

GST rates and SAC code of different services:

The various SAC codes and GST rates for different services provide dealers and businesses with a clear understanding of the tax applied to the services they offer or receive.

Is it compulsory to specify the SAC code in the invoice?

As per Notification Number 78/2020, CT(R), dated 10th November 2020, it is mandatory for service providers to furnish the SAC (Services Accounting Code) if their annual aggregate turnover exceeds Rs.5crore in the previous year on their invoices as well as while filling GSTR-1.

For businesses earning below Rs.5 crore, a 4-digit SAC code must be furnished for B2B (Business-to-Business) transactions. This rule is summarized as follows:

Supply of Services	SAC digits
To Registered B2B business	4
To consumers or composition dealers, i.e., B2C	4 but optional
To unregistered dealers	Nil

It aids in correctly classifying services and ensures the accurate application of GST rates to transactions. The SAC code assists the government in monitoring and regulating the collection of taxes and also ensures compliance with GST laws.

Use of SAC (Service accounting code) in GST :-

There are several benefits of using SAC codes, such as:

Uniformity: It creates uniformity in the tax system.

Identification of services: Allocation by unique codes to different services, thus enabling easy distinguishing between different services.

Identification of GST Rate: Businesses can easily identify the GST rate applicable to the services rendered by them.

Compliance: It simplifies the process of tax calculation and filing of GST returns for businesses.

Monitoring and tracking: By using SAC Code, the government can monitor and track the taxes paid on services.

Difference between SAC Code and HSN Code

Particulars	SAC	HSN
Full form	Full form of SAC is Service accounting Code	Full form of HSN is Harmonized System of Nomenclature
Nature of Classification	Used to classify services	Used to classify goods
Digit	Six digit	Eight digit
Structure
First two digits	Represent the major service category	Represent the chapter
Next two digits	Represent the specific service	Represent the Heading
Final two digits of SAC and final four digits of HSN	Represent the sub-service	Represent the product code

Benefits of SAC code

1. Help in Finding the appropriate GST Rates for the Service:
   With the help of the SAC code, it is easy to identify the applicable GST rates for a specific service. GST rates for various services vary based on their nature and classification. Businesses can easily determine the correct GST rate for any service by using the SAC code system and ensuring that they levy the right amount of tax from their customers.
2. Separation of Services from Other Activities:
   With the help of SAC codes, businesses can avoid any confusion or misinterpretation of their services and can ensure that they are classified correctly under the GST.
3. Support in Filing of GST Return:
   The GST returns require Taxpayers to report their sales, purchases and the amount of tax payable. Businesses can easily identify the services for which they have charged GST and report the same in their GST returns. This helps in avoiding any errors or discrepancies in GST filings. By using SAC Codes, Businesses ensure that they are complying with the GST regulations.

FAQs (Frequently Asked Questions) on SAC Code

Q : What is SAC Code (SAC full form in GST)?
A : SAC code stands for Service Accounting Code.

Q : SAC code means?
A : SAC code meaning is Service Accounting Code. It is used to classify services.

Q : What is HSN and SAC code?
A : SAC code stands for Service Accounting Code. It is used to classify services.
HSN Code stands for Harmonized System of Nomenclature. It is used to classify goods.

Q : Is it mandatory to mention the SAC code in the invoice?
A. SAC Code requirement in Invoice (SAC code turnover limit)

Annual Aggregate Turnover in PY	Type of Invoice	No of digits of SAC to be declared
Up to 5 crores	Mandatory for B2B tax invoices	4
	Optional for B2C tax invoices	4
More than 5 Crores	Mandatory for all invoices	6

Q : Software Development & IT Services SAC Code?
A: Information technology (IT) design and development services SAC code is 998314.

Group 99831		Management consulting and management services; information technology services.
	998311	Management consulting and management services including financial, strategic, human resources, marketing, operations and supply chain management.
	998312	Business consulting services including public relations services
	998313	Information technology (IT) consulting and support services
	998314	Information technology (IT) design and development services
	998315	Hosting and information technology (IT) infrastructure provisioning services
	998316	IT infrastructure and network management services
	998319	Other information technology services n.e.c

Q : What is the Accounting services SAC code and Rate?
A : SAC codes for accounting services is as below :-

• SAC Code 998221 – Financial auditing services
• SAC Code 998222 – Accounting and bookkeeping services
• SAC Code 998223 – Payroll services
• SAC Code 998224 – Other similar services

Q : SAC Codes for Legal Services
A : SAC Codes for Legal Services is as below :

• SAC Code 998211 – Legal advisory and representation services concerning criminal law.
• SAC Code 998212 – Legal advisory and representation services concerning other fields of law.
• SAC Code 998213 – Legal documentation and certification services concerning patents, copyrights and other intellectual property rights.
• SAC Code 998214 – Legal documentation and certification services concerning other documents.
• SAC Code 998215 – Arbitration and conciliation services
• SAC Code 998216 – Other legal services

Q : How can I search SAC Code for all the services ?
A : Click on the link below to get the SAC Codes of different services:
https://lawlegends.in/article/sac-code-and-description/

Disclaimer:-The information available on this website/ App is solely for informational purposes. We make no representation or warranties of any kind, express or implied about the accuracy, reliability, with respect to information and material or video available on website/APP, any reliance you place on such information is therefore strictly at your own risk. We are not liable for any consequence of any action taken by you relying on the material/information provided on this website.