Revenue is required by the governments for administrative, welfare, and infrastructure projects. The Indian government charges taxes to raises revenue. Taxes in India can be classified into direct tax and indirect tax. They charge direct taxes are on the income and indirect taxes are on products and services. Previously India had a complicated indirect taxation system with sales tax, central excise duty, customs duties, octroi tax, service tax, etc.
The government of India has implemented the Goods Service Tax or GST in 2017 to reduce the number of taxes in one tax. It bought all indirect taxes under the GST umbrella. The SAC Code (Service or Accounting Code) is used to classify services so mainly useful for businessmen, manufacturers, suppliers, exporters, and so on. The Central Board of Indirect Taxes or Customs (CBET) issued a unique SAC Code in GST to classify all the services available in the country.
What is the SAC code in GST?
The SAC code GST is modeled on the Harmonized Commodity Description and Coding System or HSN Code. The HSN code is an internationally recognized code used to classify products. Meanwhile, we use the SAC code in GST to classify different services. The codes help us to identify the services easily and calculate applicable taxes.
The SAC code GST was implemented under the Service Tax Department operating under the CBET board. The SAC includes services like hospitality, educational services, legal services, IT services, etc.
Understanding the SAC Code GST
The SAC Code in GST is a six-digit code. Each service has a unique code. It is applied when service providers create an invoice for services rendered. But how do you decode the SAC Code GST? The SAC codes are divided into chapters and subsections. The first-two digit of every code begins with 99, denotes all types of service. The second and third digits denote the nature of the service, and the last two digits give a more detailed description.
E.g. The SAC code 99.83.14 will represent
- 99- All types of services
- 83- IT services
- 13- Design and development services
Who uses SAC Code in GST?
Companies are required to file the SAC code GST, based on the previous financial year’s turnover. The rules of using the SAC code in GST is as follows-
- If your company’s turnover is less than 1.5 Crore SAC Code is not mandatory.
- Companies with an annual turnover of 1.5 crores or over are obligated to mention the applicable SAC Code in the invoice and file returns.
Benefits of SAC Code in GST
The benefits of SAC Code GST are:-
- The SAC code can help businesses or clients identify the applicable GST rates for a particular service.
- It is mandatory to mention the SAC Code during GST registration.
- The code makes it easy to identify the appropriate services in the extensive list of services listed.
What is the difference between HSN Code and SAC Code GST?
Chapter 99 in the HSN code deals with services. The difference between HSN and SAC is as follows –
- The HSN codes describe products, and SAC Code GST classifies services.
- HSN Code has 8 digits, and the SAC code has 6 digits.
- World customs organization developed the HSN Code and was later modified to the ITC Code. Central Board of Indirect Taxes or Customs (CBET) formulate SAC Code rules.
Where do you find SAC Code in GST?
Users can use several resources to find the SAC Code. You can use the GST website to find the code. Several websites offer a list of SAC Codes with the applicable slabs. One of the best resources to find SAC Code GST is Seair Exim Solutions. Our user-friendly website helps you to find relevant information quickly. We have been market leaders in providing import-export data since 2009. The latest Exim news and GST rates are visible on our website. We assure users of authentic information.
Is it essential to specify the SAC Code GST in the invoice?
The SAC code in GST helps identify services provided by an organization. If the company has a turnover of over 1.5 crores, it needs to specify the SAC code in the invoice. Remember to specify the SAC Code GST during the GSTR filling. Be very careful to use the correct code to save time and helps you to improve finances.
How do I file GSTR 1?
The GST has changed how businesses run in India. The process is not difficult. Here is the step-by-step way; you can file your returns. These returns need to be filed by 31st March changes if any are announced by the government.
- You need to get the exact slab rate for goods and services. This will depend if you are supplying goods or services. Goods require HSN Code, while services require SAC Code in GST. After that, you need to find the GST slab. Presently the GST council has created five slabs 5%, 12%,18%, and 28% applicable for both goods and services.
- After finding the slab you will need to find applicable SAC Code GST. Businesses need to consider the address of origin while filing their returns. The rules regarding e-commerce services are more complicated.
- The GST rules state the service provider needs to collect the tax from their client and pay the amount to the government.
- As per GST rules, service providers need to file 3 GST forms in a month. Small businesses having turnover is less than Rs. 75 lakh can opt to file average service tax annually.
- If you provide multiple services you need to enter the SAC Code in GST for each service in the correct field. The applicable rates will be computed based on your previous turnover.
Businesses need to be careful while completing paperwork. They are obligated to use the right SAC Code in GST in the invoice and GSTR-1 returns. A stiff penalty of Rs 50000 will be levied for not mentioning the correct SAC or using incorrect SAC Code GST.