All we need to know about – SAC code in GST

Introduction

The Central Board of Indirect Taxes and Customs created the system of nomenclature known as SAC code in GST. These codes are used to identify services and the GST rates related to the services in order to determine the amount of tax due.

What is SAC code?

The term “SAC” stands for Servicing Accounting Code. The service tax department in India has developed the SAC Codes as a system of categorization for services. The GST Council has opted to use the SAC code system for the purpose to levy GST (Goods and Service Tax) in India.

What is SAC code in GST?

SAC refers to the 6-digit code in GST under GST law. For example, the SAC for IT design and development services is 998314.

• For all services, the first two digits of the SAC are the same, which is 99.
• In this case, the major type of services will be represented by the middle two digits (83) are IT services.
• The last two digits (14) will indicate the details for the Design and Development services.

What are the benefits of SAC Codes to the company?

There are several benefits of SAC codes given below :

• SAC codes assist both the client and the business in identifying the applicable GST rates for a certain service.
• SAC codes must be mentioned while registering for GST and sending out GST invoices.
• These codes help to identify and separate the services from the wide range of other services that are offered.

SAC codes and GST rates for various services

Dealers and businessmen can clearly understand the tax assessed on the services they provide or get because of the SAC codes and GST rates against the various services. It’s important to understand SAC codes because India’s current services-driven GDP supports millions of jobs for Indian citizens.

Who May Use SAC Codes?

Service providers must use SAC codes while filling out GSTR (Goods and Services Tax Return). The services include providing hospitality, educational, financial, and other services. All services are categorized under chapter 99 of HSN module, which is devoted to services. The GSTR forms must include the SAC code. The requirements for using the SAC code in GSTR filing are given below.

• The SAC code is not required for the company which has a turnover less than Rs. 1.5 crores.
• SAC code is mandatory for the company which has a turnover between Rs. 1.5 to 5 crores.
• One must specify the SAC codes if the dealer or company has a turnover of more than Rs. 5 Cr.

Conclusion

SAC codes have a four to six-digit length and these are categorized by different heading and section numbers. Job works have their own SAC code for them. Other technical, professional, and business services are covered by SAC code 9983. These codes are used for creating invoices and filing GST returns.