SAC Code in GST: Full Form, Meaning, List, Benefits, Uses, Importance, How Does It Work

Understanding Service Accounting Codes (SAC) is important for businesses providing services under Goods and Services Tax (GST). Each six-digit SAC code identifies a specific service, ensuring the correct GST rate, tax filing, and compliance. Proper classification helps with GST registration, invoicing, and accurate tax reporting. This guide explains what SAC codes are, how the classification works, key benefits, and why businesses need to use the correct code. It also provides detailed information on SAC codes for services like consultancy, transport, real estate, and more, along with a comparison of SAC and HSN codes.

What is the SAC Code in GST?

The SAC code stands for Services Accounting Code and applies to all services provided within India. This system is used to identify, classify, measure, and determine the GST applicable to services in India.

The HSN (Harmonized System Nomenclature) code is used for goods in India. It follows the World Customs Organization’s (WCO) standard code for classifying goods worldwide. In contrast, the SAC code system is based on the United Nations Central Product Classification (UNCPC) but has been modified to suit India's needs by the CBIC.

The explanatory notes for service classifications in India are based on the UNCPC system, with some changes recommended by the committee set up for the implementation of SAC in India.

Under GST, services classified under the SAC code are taxed at five different rates: 0%, 5%, 12%, 18%, and 28%. If a service is not listed under the SAC codes or does not have a specific SAC code, it is charged an 18% GST by default.

The allocation of SAC codes to services allows the government to track GST collections for each service category.

What is the SAC Number?

Under GST, the SAC code is a six-digit number. Since services are classified under Chapter 99, all SAC codes begin with 99. The remaining four digits describe the specific nature of the service. Let's look at an example to understand this better.

For instance, 995411 is the SAC code for general construction services of multi-storey residential buildings, single homes, or multi-dwelling units.

Here is how it breaks down:

• 99 represents the 'chapter', which, in this case, refers to services and is the same for all SAC codes.
• 54 represents the 'heading', which is the main category of the service. In this example, it's 'construction services'.
• 11 represents the 'service code', which details the specific type of service. In this case, it stands for 'general construction services of buildings'.

Uses of Service Accounting Code in GST?

The Service Accounting Code (SAC) in the Goods and Services Tax (GST) framework serves several vital functions:

Service identification

SAC codes provide a unique identifier for each service, facilitating the differentiation and categorisation of various offerings. This structured approach enhances the classification and monitoring of services for taxation purposes.

GST rate determination

SAC codes play a critical role in determining the applicable GST rate for specific services. By referring to the SAC code linked to a service, GST taxpayers can quickly identify the correct tax rate that should be applied.

GST registration

When registering on the GST portal, taxpayers must utilise SAC codes to detail the specific services they provide. This ensures adherence to GST regulations and proper categorisation of services.

Invoicing

Taxpayers are required to include the relevant SAC code on invoices issued to clients for services rendered. This inclusion promotes transparency in tax calculations and aids clients in understanding the GST implications of the services they receive.

GST returns

When filing GST returns, it is essential for taxpayers to report service-related transactions using the appropriate SAC codes. This step is crucial for accurate tax reporting and ensuring compliance with GST regulations, ultimately contributing to the efficiency of the tax system.

Importance of SAC Code for Business

SAC codes are vital for ensuring effective service classification, tax compliance, and transparency in the GST framework.

• Unique Service Classification: SAC codes provide unique identifiers for each service, simplifying the classification and differentiation of services for tax purposes.
• Determining Applicable GST Rates:These codes are crucial in establishing the applicable GST rates for services, enabling taxpayers to quickly ascertain the correct tax rates based on the services provided.
• Compliance in GST Registration: SAC codes are required during GST registration, ensuring that taxpayers accurately identify the services they offer, thereby complying with GST regulations.
• Enhancing Invoice Clarity: Incorporating SAC codes on invoices improves transparency in tax calculations, assisting clients in understanding the GST implications of the services rendered.
• Ensuring Precise GST Reporting: When submitting GST returns, taxpayers are required to report service transactions using the correct SAC codes, which is vital for precise tax reporting and compliance.
• Facilitation of Business Loans: By ensuring compliance with GST, businesses can more easily meet the business loan eligibility criteria, which often requires adherence to tax regulations.

How does SAC code work in GST?

Under the Goods and Services Tax (GST) framework, the Service Accounting Code (SAC) is a six-digit code designed to classify services. The first two digits, "99," indicate that the code pertains to the services chapter. The following four digits offer a more detailed classification, specifying the major service category and the exact nature of the service provided.

For example, in the SAC code 995411, "99" identifies the chapter related to services, while "54" corresponds to the major service category of construction services. The final two digits, "11," further detail this category, denoting general construction services for buildings.

This structured approach helps streamline the taxation process by clearly categorising various services, facilitating compliance for service providers and enhancing transparency for tax authorities. By using SAC codes, businesses can ensure they are applying the correct tax rates and adhering to GST regulations. Overall, the SAC system plays a vital role in the efficient implementation of GST, allowing for better monitoring and categorisation of service-related transactions within the Indian economy.

SAC code	Description
99	Exemptions apply to services such as charitable services, transfer of a going concern, government services for Panchayats and Municipalities, government services based on turnover thresholds, services between government bodies, low-value services, and non-commercial services from non-taxable areas. Other exemptions include services for the RBI, United Nations, foreign diplomatic missions, FIFA U-17 World Cup 2017, technology-related services, and composite supplies within specific value limits.
9954	Construction services, including works contract services, building construction for sale or personal use, and services provided to the government or registered persons.
9961	Wholesale trade services, covering functions like transportation, warehousing, marketing, promotion, and other activities supporting large-scale distribution and efficient supply chains.
9962	Retail trade services, including retail management, merchandising, product promotion, customer assistance, and other related activities provided for a fee or commission.
9963	Accommodation services, including lodging at hotels, guest houses, motels, serviced apartments, resorts, hostels, and similar establishments.
9964	Passenger transport services, including air, road, and rail travel, covering charges for transportation, parking, tolls, and related services.
9965	Goods transport agency (GTA) services for the transportation of goods, including used household goods for personal use.
9966	Vehicle rental services, excluding goods transport, including the rental of cars, trucks, motorcycles, bicycles, trailers, and semi-trailers, with or without drivers.
9967	Support services for transportation, including cargo handling, packing, storage, warehouse services, freight forwarding, and other services that aid transportation activities.
9968	Postal and courier services, covering mail delivery, package handling, express delivery, and tracking services provided by postal and courier companies.
9969	Services related to electricity, gas, and water supply, covering activities such as power generation, electricity distribution, gas supply, water treatment, and related maintenance services.
9971	Financial services, covering banking, lending, insurance, investment advisory, and other financial transactions.
9972	Real estate services, including activities like construction, sale, purchase, leasing, and renting of properties.
9973	Leasing or rental services of immovable property, including land, buildings, and other properties for temporary use or occupation.
9981	Research and development services, covering scientific, market, and other research services in fields such as agriculture, medical science, engineering, and social science.
9982	Legal and accounting services, including legal advisory, representation, accounting, bookkeeping, auditing, and tax consultancy services.
9983	Other professional services, including photography, event management, interior design, security services, and graphic design.
9984	Telecommunication services, including internet, mobile, and other related services.
9985	Support services for businesses, such as document preparation, translation, data processing, business support, packaging, and organising conventions.
9986	Support services related to agriculture, forestry, fishing, and animal husbandry, including crop services, livestock services, and landscape gardening.
9987	Maintenance services, covering repairs, cleaning, and general upkeep of assets and equipment.
9988	Manufacturing services, covering various sectors such as food, beverages, textiles, chemicals, rubber, printing, and furniture.
9989	Printing and publishing services, including printing, copying, graphic design, typesetting, bookbinding, and publishing.
9991	Public administration and government services, including regulatory services, licensing, public safety, and other government-related functions.
9992	Services provided by government or local authorities, including issuing licenses, permits, certificates, and other regulatory services.
9993	Healthcare services, covering medical treatments, consultations, diagnostics, and services provided by hospitals, doctors, and paramedics.
9994	Maintenance and repair services, covering repairs and maintenance of buildings, machinery, vehicles, electrical equipment, plumbing, and other assets.
9995	Membership organisation services, covering services provided by membership organisations for GST registration and compliance.
9996	Recreational services, covering activities like amusement parks, water parks, circuses, sporting events, and other similar leisure activities.
9997	Miscellaneous services, including washing, cleaning, beauty services, and services related to non-performance of contracts with fines or liquidated damages.

SAC code for consultancy services

Under the Goods and Services Tax (GST) system, business consulting services, including public relations services, are identified using the SAC code 998312. This code is used to classify services, with each service being assigned a specific SAC (Services Accounting Code). The SAC code helps determine the applicable GST rate for different services in India, which can fall under one of five tax slabs: 0%, 5%, 12%, 18%, or 28%.

In contrast, goods are taxed according to the HSN code, a global classification system used by over 200 countries for the import and export of items. Goods are subject to seven different tax rates: 0%, 0.25%, 3%, 5%, 12%, 18%, and 28%.

Service Accounting Codes (SAC) for transport services

Transport services, from freight to passenger conveyance, have designated SAC codes, which helps distinguish between various transport service types. Some of the SAC codes for transport services are:

SAC Code	Service description
996421	Passenger rail transport services over long distances, including railways, metros, and similar systems
996422	Long-haul passenger road transport services via buses, cars, unscheduled bus and coach services, and stage carriages
996423	Services for taxis, including radio taxis and similar types of passenger transport
996424	Passenger transport services over coastal and international waters using ferries, cruise ships, and similar vessels
996425	Scheduled air travel services for passengers, both domestic and international
996426	Air transport services for passengers on an unscheduled basis, covering both domestic and international flights
996429	Miscellaneous long-distance passenger transport services not classified elsewhere

Service Accounting Codes (SAC) for real estate agents

Real estate agents offering various services fall under specific SAC codes for GST purposes. Here are the relevant SAC codes for real estate brokers:

• SAC Code 997221: Applies to property management services provided under a contract or for a charge.
• SAC Code 997222: Covers building sales conducted under a contract or on a fee/commission basis.
• SAC Code 997223: Pertains to land sales conducted under a contract or on a fee/commission basis.
• SAC Code 997224: Real estate evaluation services fall under this code and are offered under a contract or for a charge.

For all real estate services provided on a fee/commission basis or under a contract, the applicable GST rate is 18%.

These SAC codes are essential for real estate agents to accurately classify their services for GST purposes and determine the appropriate tax rate for their transactions.

Service Accounting Codes (SAC) for real estate services involving owned or leased property

Real estate services related to owned or leased property are categorized under specific SAC codes for GST purposes. Here are the relevant SAC codes for such services:

• SAC Code 997211: Applies to rental or leasing services involving owned or leased residential property.
• SAC Code 997212: Covers rental or leasing services involving owned or leased non-residential property.
• SAC Code 997213: Pertains to trade services of buildings.
• SAC Code 997214: Relates to trade services of time-share properties.
• SAC Code 997215: Involves trade services of vacant and subdivided land.

It’s important to note that services involving renting out residential properties for habitation are exempt from tax. However, the applicable GST rate for additional rental services is 18%. These SAC codes help accurately categorize and tax real estate services involving owned or leased properties.

How do you find the Service Accounting Code number for a property?

Finding the Service Accounting Code (SAC) number for a property involves several steps:

• Identify the service: Determine the specific service related to the property, such as property management, rental, or real estate brokerage.
• Access official resources: Visit the official website of the relevant tax authority, such as the Goods and Services Tax (GST) portal in India.
• Use search tools: Utilize the SAC code search tool provided on the portal. Enter keywords related to the property service.
• Review codes: Review the list of SAC codes generated by the search. Each code is associated with a specific service description.
• Consult documentation: Refer to official GST documentation or guides for detailed descriptions and examples to confirm the correct SAC code.

By following these steps, you can accurately find the SAC number for a property-related service.

SAC Code Length Requirements for GSTR-1

The Services Accounting Code (SAC) length requirement varies based on the annual aggregate turnover of service providers. Below is a breakdown of the key details:

1. Turnover Over Rs. 5 Crore: Service providers must include all 6 digits of the SAC code on invoices and during the filing of GSTR-1. This requirement has been mandatory since April 1, 2021.
2. Turnover Under Rs. 5 Crore:
   • B2B Transactions: Only 4 digits of the SAC code are required for registered businesses.
   • B2C Transactions: SAC code is optional; when used, only 4 digits are necessary.
   • Unregistered Dealers: No SAC code is required.
3. Non-Compliance Penalties: Failure to follow these SAC code requirements can result in penalties of Rs. 50,000 under the IGST Act or Rs. 25,000 each under the CGST and SGST Acts.

These regulations, effective since November 2020, ensure correct SAC code usage and accurate GST reporting based on service providers' turnover.

Differences between SAC Code and HSN Code

The SAC and HSN codes serve similar purposes but in different contexts. While SAC is used for services, the Harmonised System of Nomenclature (HSN) code is used for goods. Key differences include:

Description	SAC Code	HSN Code
Goods vs Services Identification	SAC codes are allotted to services.	HSN codes are used to classify goods.
Source Code	SAC codes are a modified version of the UNCPC code system. These changes were made by the CBIC and apply to all services supplied in India.	HSN codes are based on WCO’s HSN nomenclature system, which is used worldwide for classifying goods. While WCO’s harmonised system separates goods into over 5,000 commodity groups with a 6-digit number, Indian HSN codes have been modified to an 8-digit number.
Number of Digits	SAC codes comprise 6 digits.	HSN codes constitute 8 digits.
Example	Consider the SAC code 998314	Consider the HSN code 62011210
		62 represents the chapter ‘Apparel and clothing accessories that are neither crocheted nor not knitted.’
	99 stands for the common code for services.
		01 represents the heading of the chapter ‘boys’ and men’s overcoats, capes, coats, blazers, jackets, etc.’
	83 stands for the major service category, ‘IT services.’
		12 represents the subheading of the chapter and states that it only deals with boys’ and men’s raincoats, overcoats, capes, car coats, and cloaks made of cotton.
	14 stands for the detailed explanation of the nature of the service rendered, which is design and development, in this case.
		10 represents an even more detailed description and talks about cotton raincoats.

Is it mandatory to mention the SAC Code in invoices?

Yes, mentioning the SAC code on invoices for service transactions is mandatory under the GST law. This requirement:

• Ensures transparency and clarity in the taxation process.
• Aids in the seamless filing of GST returns.
• Enhances the credibility of businesses when applying for business financing, as it demonstrates compliance with tax laws.

Why is the SAC number significant?

The Service Accounting Code (SAC) number is significant for several reasons:

• Tax compliance: SAC numbers help ensure compliance with tax regulations, particularly under the Goods and Services Tax (GST) regime, by accurately categorizing services for taxation purposes.
• Standardization: They provide a standardized system for identifying and categorizing services, which simplifies tax administration and helps in maintaining uniformity across different sectors and regions.
• Accurate tax calculation: Using the correct SAC number ensures that the correct tax rate is applied to services, preventing underpayment or overpayment of taxes.
• Documentation and reporting: SAC numbers are essential for proper documentation and reporting in tax returns, which is crucial for audits and financial transparency.
• Dispute resolution: They help in resolving disputes related to tax assessments by providing clear definitions and categories of services.

In summary, SAC numbers play a critical role in tax administration, compliance, and financial accuracy.

Conclusion

The SAC code system is an integral part of the GST regime, playing a crucial role in simplifying and standardising the taxation of services. Its relevance extends beyond tax compliance, impacting business financing and loan applications. By ensuring adherence to SAC requirements, businesses can streamline their operations, enhance their eligibility for business loans, and contribute to a transparent and efficient tax system. Understanding the concept of SAC code is not just about meeting regulatory requirements but also about leveraging financial opportunities in the landscape of Indian business financing.