SAC Code for Consultancy Charges

With the introduction of GST, the taxation system in India has gone through a significant transformation with the aim to simplify the process. Along with this change, a new term called SAC codes (Services Accounting Codes) is constantly being used by the taxpayers.

The SAC code for consultancy services is essential for both consultants and businesses availing these services. It not only ensures compliance with tax regulations but also provides clarity on the applicable rates and exemptions.

In this article, we will talk about the SAC code classification for consultancy charges and understand why it is important for companies in today’s business environment.

What are SAC Codes for Consultancy?

SAC stands for Service Accounting Code and it’s a six-digit code assigned to different services under the Goods and Services Tax (GST) regime in India. SAC codes help classify services to apply the correct GST rate, file returns, and maintain proper accounting records.

Moreover, SAC code for consultancy services falls under Chapter 99 of HSN Code Lists and a broad category of 9983- “Other professional services.” However, depending on the specific type of consultancy, there might be more precise sub-codes.

What is the Scope of SAC Code 9983?

The consultancy services SAC code 9983 consists of a broad range of specialized services which show their versatility in the professional service sector. Here are some of the examples of services that are covered under SAC code 9983:

• Security Services: Services that ensure safety and security like manned guarding, access controls, CCTV surveillance, alarm monitoring, etc.
• Graphic Designing: Professionals that use their skills to create visual content such as logos, websites, brochures, ad copy, and other design projects.
• Specialized photography services: Fashion, aerial, product photography, wildlife, and other forms of photography that fall under this section.
• Interior Designing: These services include designing or decorating the interior space to enhance their look and functionality. It includes both commercial and residential properties.
• Event Management: Professionals who excel in planning and managing events, exhibitions, weddings, parties, get together, and more.

How Is Services Accounting Codes (SAC) Derived?

SAC (Services and Accounting Codes) are based on HSN (Harmonized System of Nomenclature) codes, which is an internationally recognized system for classifying products worldwide. Business consultancy services sac code is used by organizations to file their GST returns and pay accurate taxes to the government.

To understand how this 6-digit SAC in GST is derived, let’s take an example for the code 998314. This is the SAC code for IT consultancy services and IT design and development services.

• The initial two digits in the SAC are the same for all services, which is 99. Which indicates Chapter 99 of the HSN code.
• The middle two digits state the nature of services, in this case, IT services.
• The last two digits indicate the detailed and specific nature of the service, which is Design and Development in this case.

The main difference between the SAC and HSN is that SAC specifies codes for services and HSN codes are meant specifically for Goods. Another difference is the number of digits in their code, for instance, SAC has 6 digits and HSN code has 8 Digit codes.

Why are SAC Codes Important?

SAC codes, or Services Accounting Codes for consultancy services, hold significant importance in India’s Goods and Services Tax (GST) regime.

SAC codes provide a standardized system for classifying and identifying various services rendered under GST. This uniformity eases record-keeping, returns filing, and communication between businesses and tax authorities.

Furthermore, each SAC code is linked to a specific GST rate (0%, 5%, 12%, 18%, or 28%). By accurately identifying the service provided using the right SAC code, businesses can ensure they apply the correct tax rate, avoiding errors and potential penalties.

SAC Code for Business Consultancy Services and IT Consultancy Services

Business Consultancy Services and IT Consultancy Services come under the SAC code 998312. The SAC code for consultancy services, developed by the service tax department in India, helps determine the GST rate for these services, which can range from 0% to 28%. Similarly, the HSN code is used for taxing commodities, which also ranges from 0% to 28%.

For IT service providers, GST registration is mandatory if their annual taxable services exceed ₹ 20 lakh, they engage in interstate supply of goods or services, and provide OIDAR (Online Information Database Access and Retrieval) services.

SAC Codes & GST Rate for Services

Below is the categorization for the SAC Code for consultancy services under GST:

Conclusion

SAC codes play a vital role in the GST regime, particularly for consultancy services. These codes provide a structured framework for classifying various services, ensuring accurate tax calculation and compliance.

The scope of SAC code encompasses diverse consultancy services, from IT to SAC code for tax consultancy services, each with its specific code and GST rate.

By understanding and applying the correct SAC code, businesses can navigate taxation efficiently and maintain regulatory adherence, facilitating smooth operations in the dynamic business landscape of India.