All you need to know about the GST SAC code
The key factors behind the smooth and steady success of Goods & Service Tax policy in India are consistency and accuracy. There is no doubt that our indirect tax framework is deemed fit by other nations as well, and this is due to the fact that it is devised and enforced in a systematised manner. Comprehensiveness and accessibility are other 2 vital aspects that govern India’s GST policy and make it an impeccable model for the third-world nations.
There are 2 essential features that ensure uniformity in the treatment of goods & services under GST are-
- HSN (Harmonized System of Nomenclature) code and
- SAC code
Just like all ‘goods’ (tangible items of trade) under GST are categorized with a unique HSN code, the services (intangible or the invisibles) are grouped under different SAC codes.
All the taxpayers from tertiary sector who have GST registration under the composition scheme are required to required to specify the SAC code of the services they deal in, clearly in their GST invoices and while GST return filing procedure.
#1. What is a SAC code?
SAC is an acronym for Services Accounting Code. The SAC codes are the unique codes that are issued to uniformly categorize all the services under GST. Just like the goods, services are also classified uniformly for recognition, measurement and taxation. Codes for services are called Services Accounting Code or SAC.
All services have a unique SAC. The SAC codes are supposed to be entered in the GST invoices made by the service providers for the services they render to their customers.
#2. Who issues the SAC code?
The SAC codes for all the services are issued by the Central Board of Indirect taxes and Customs (CBIC).
#3. When was the SAC introduced?
The system of classification of services as per different Services Accounting Codes was put forward by the GST Council in its 23rd meeting held on 10th November 2017.
#4. What is the structure of a SAC code?
A SAC code can be divided into 3 segments-
- Uniform initial digit
- Description of service
- Detailed Description of service
The last 2 digits are additionally entered to provide a Detailed Description of the particular service in the general category of similar services.
This can be well understood with an example given below-
Let us take an instance of Support services to agriculture, hunting, forestry, fishing, mining and utilities, whose SAC code is 9986.
Now, if we are considering the extraction of oil and gas, the SAC code will be 998621, wherein-
- The first 2 digits are Uniform initial digits, i.e. same for all services - 99
- The next 2 digits (86) represent the broad nature of service, which in this case, is Support services to agriculture, hunting, forestry, fishing, mining and utilities.
- The final 2 digits (21) denote the detailed description of the particular service, which in this case, is Support services to oil and gas extraction.
#5. Where is the SAC code required to be furnished?
Every business entity that has undergone the GST Registration under the composition scheme with the annual turnover above â‚¹ 1.5 crores are required to enter the SAC code of the services they provide, clearly in their GST invoices and while filing the GSTR-4.
With that, you will now be truly conversant with the concept of SAC codes under GST Registration.
Now, if you need any sort of guidance regarding GST registration or GST return filing online, feel free to contact us at 8881-069-069.