SAC code in GST

Introduction

The GST system uses a nomenclature called SAC code, which was created by the Central Board of Indirect Taxes and Customs. These codes aid in identifying services and their corresponding GST rates to calculate the applicable tax amount.

What is SAC code in GST?

SAC stands for Servicing Accounting Code and it is a categorization system for services developed by the service tax department in India. The GST Council has adopted the SAC code system to levy GST in India. In GST law, SAC refers to a six-digit code that represents a particular service.

Who may use SAC Codes?

Service providers must use SAC codes while filling out Goods and Services Tax Returns (GSTR) for services like hospitality, educational, financial, and others.

SAC codes are not mandatory for companies with a turnover of less than Rs. 1.5 crores, but they are necessary for companies with a turnover between Rs. 1.5 to 5 crores.

For companies with a turnover exceeding Rs. 5 Cr, the SAC code must be specified.

Businesses whose turnover is below Rs.5 crore, a 4-digit SAC code are required be furnished for B2B transactions.

SAC Codes and GST rates for various services

The first two digits of the SAC are always 99, followed by the middle two digits that represent the major type of service, and the last two digits that indicate details for the specific service. Here are few examples of SAC code & GST rate:

• Courier Services: The service has a six-digit SAC code of 9968, with the last two digits depending on the specific type of courier service being offered. The GST rate of this services is 18%.
• Recruitment & HR Services: The service has a six-digit SAC code of 9985, with the last two digits depending on the specific type of recruitment & HR service being offered. The GST rate of this services is 18%.
• Legal Services: The service has a six-digit SAC code of 9982, with the last two digits depending on the specific type of legal service being offered. The GST rate of this services is 18%.

Benefits of SAC code

SAC codes offer several benefits to companies, including

1. Identifying the applicable GST rates for a service

The SAC codes are used to identify the applicable GST rates for a particular service. The GST rates for different services may vary based on their nature and classification. By using the SAC code system, businesses can easily determine the correct GST rate for a service and ensure that they charge the correct amount of tax to their customers. This not only helps in complying with the GST regulations but also ensures that the customers are not overcharged or undercharged for the services they receive.

2. Separating services from the others

SAC codes also help to separate services from the wide range of other services that are offered. With the help of these codes, businesses can easily categorize their services and distinguish them from other types of services or products they offer. This helps in keeping the records and accounts organized and streamlines the process of reporting and compliance with GST regulations. By using SAC codes, businesses can avoid any confusion or misinterpretation of their services and can ensure that they are classified correctly under the GST system.

3. Assisting in the filing of GST invoices

SAC codes are mandatory to be mentioned while registering for GST and while generating GST invoices. By using SAC codes, businesses can ensure that they provide accurate and detailed information about the services they offer to their customers. SAC codes also help in preparing GST invoices in a standardized format and assist in filing GST returns. The GST returns require businesses to report their sales, purchases, and the amount of tax paid on them. By using SAC codes, 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 and ensures that businesses comply with the GST regulations.

Conclusion

SAC codes, with their four to six-digit length, are categorized by heading and section numbers. Each job work has its own SAC code, and technical, professional, and business services fall under SAC code 9983. These codes are essential for creating invoices and filing GST returns in India, where the services-driven GDP supports millions of jobs.