SAC Codes vs HSN Codes: What Service Providers Must Know
Understand the difference between SAC and HSN codes in India's GST system. Find out which codes apply to your business.
While the terms HSN and SAC are often used interchangeably in GST discussions, they serve distinctly different purposes. If you run a business in India, knowing which classification system applies to you is vital for generating compliant invoices and avoiding filing errors.
Whether you need an HSN or a SAC, our HSN Code Lookup tool is equipped to search both databases instantly.
What is an HSN Code?
HSN stands for Harmonized System of Nomenclature. It is an internationally recognized system used to classify Goods.
- It was developed by the World Customs Organization (WCO).
- It is used globally for customs and trade, ensuring uniformity in product classification.
- Under GST, HSN codes dictate the tax slab (5%, 12%, 18%, or 28%) for physical items like electronics, clothing, machinery, and food products.
- Example: The HSN code for a Laptop is
84713010(taxed at 18%).
What is a SAC Code?
SAC stands for Services Accounting Code. It is a unique classification system developed by the Central Board of Indirect Taxes and Customs (CBIC) specifically for India, used to classify Services.
- SAC codes are purely domestic and do not have international counterparts like HSN.
- All SAC codes begin with the number 99.
- Example: The SAC code for Information Technology (IT) consulting services is
998314(taxed at 18%).
Key Differences at a Glance
| Feature | HSN Code | SAC Code |
|---|---|---|
| Used For | Physical Goods | Services |
| Format | 4, 6, or 8 digits | Always 6 digits |
| Origin | International (WCO) | Domestic (CBIC India) |
| Starting Digits | Varies by chapter (01 to 98) | Always starts with ‘99’ |
Invoicing Rules for SAC Codes
Just like HSN codes for goods, the government has mandated the use of SAC codes on tax invoices for service providers.
- If your aggregate turnover in the preceding financial year was up to ₹5 Crore, mentioning the SAC code on B2B invoices is mandatory.
- If your turnover exceeds ₹5 Crore, mentioning the 6-digit SAC code is mandatory on all invoices (B2B and B2C).
How to Handle Mixed Supplies
Many modern businesses provide a mix of goods and services. For example, an AC repair shop sells a spare part (good) and charges a labor fee (service).
- If it is a Composite Supply (naturally bundled), the principal supply dictates the code. If the labor is the primary service, the SAC code for repair services applies to the total value.
- If it is a Mixed Supply (not naturally bundled), the item with the highest tax rate determines the classification.
To ensure your invoices are flawless, compute the final tax amounts using our GST Calculator and keep track of your filing obligations with our Due Dates Calendar.
Written by Tax Expert
Our editorial team consists of taxation professionals and certified experts dedicated to simplifying GST compliance for small businesses across India.
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