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 searches both code systems. You can use the Invoice Generator to lay out the invoice after verifying the classification and tax treatment.
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 supports goods classification. The applicable rate comes from the current rate notification and depends on the exact description, tariff entry and conditions; the code alone does not decide it.
- Example: A laptop is classified within the relevant computer tariff entries, but verify the precise tariff item and current rate notification for the product being invoiced.
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, the usual minimum is 4 digits on B2B invoices; the notification permits omission on invoices to unregistered persons.
- If your turnover exceeds ₹5 crore, the usual minimum is 6 digits on invoices. See our 4-digit vs 6-digit HSN/SAC guide and verify any applicable special requirement.
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.