IT services fall under SAC group 99831 within heading 9983. The main codes are 998313 (IT consulting and support), 998314 (IT design and development, including software development), 998315 (hosting and IT infrastructure provisioning), 998316 (IT infrastructure and network management) and 998319 (other IT services). Domestic IT services are generally taxed at 18% GST.
Software companies, freelancers, IT support firms and SaaS businesses all issue GST invoices for services, and every one of those invoices needs a SAC code. IT services have their own group in the official classification, with separate codes for consulting, development, hosting and network management. This guide explains which code fits which service, how the rate works, and how to invoice correctly.
For the basics of service codes, see what is SAC code.
Where do IT services sit in the SAC classification?
IT services are part of Heading 9983 — Other professional, technical and business services, in Group 99831 — Management consulting and management services; information technology services. The official Scheme of Classification of Services lists:
| SAC | Description (as in the official scheme) |
|---|---|
| 9983 | Other professional, technical and business services |
| 99831 | Management consulting and management services; information technology services |
| 998311 | Management consulting and management services, including financial, strategic, HR, marketing, operations and supply chain |
| 998312 | Business consulting services, including public relations services |
| 998313 | Information technology consulting and support services |
| 998314 | Information technology design and development services |
| 998315 | Hosting and information technology infrastructure provisioning services |
| 998316 | Information technology infrastructure and network management services |
| 998319 | Other information technology services nowhere else classified |
Related codes outside this group:
| SAC | Description |
|---|---|
| 99841 | Telephony and other telecommunications services |
| 998431 | Online text-based information (online books, newspapers, directories) |
| 998434 | Software downloads |
| 998439 | Other online content nowhere else classified |
| 9987 | Maintenance, repair and installation services (for hardware repair) |
Which IT SAC code fits my service?
| Your service | Best-fit SAC |
|---|---|
| Custom software, website or mobile app development | 998314 |
| UI/UX design as part of building software | 998314 |
| IT strategy, architecture advice, technology audits | 998313 |
| Helpdesk, software support, AMC for applications | 998313 |
| Web hosting, cloud servers, data centre space | 998315 |
| Managed network services, server administration, monitoring | 998316 |
| Data entry, digitisation and other IT services not listed above | 998319 |
| Selling downloadable software licences | 998434 |
| Repairing laptops, printers or servers | 9987 (repair heading) |
If one contract combines several services, decide whether it is a composite supply with a principal service (for example, development with incidental hosting during testing) or separate supplies that should be invoiced on separate lines with their own SACs.
What GST rate applies to IT services?
Services are taxed under Notification 11/2017-Central Tax (Rate), as amended. Heading 9983 is serial number 21 in that notification. Notification 15/2025-Central Tax (Rate), effective 22 September 2025, redrafted item (ii) of that serial number to read "Other professional, technical and business services other than (i) above and serial number 38 below". IT services fall in this general item, which is taxed at:
- 18% IGST on inter-state supplies, or
- 9% CGST + 9% SGST on intra-state supplies.
Exports of IT services (to clients outside India, meeting the export conditions in the IGST Act) are zero-rated. You can either supply under a Letter of Undertaking (LUT) without paying IGST or pay IGST and claim a refund. See export invoice under LUT.
Software on physical media is goods: heading 8523 (discs, solid-state storage devices and other media) is in Schedule II of Notification 9/2025 at 18%.
Worked example: an IT company's monthly invoice
A Pune software company (AATO ₹7 crore last year, so 6-digit SAC is mandatory) bills a client in Pune (intra-state) for October:
| Line | SAC | Amount |
|---|---|---|
| Development of order-tracking module, 160 hours × ₹1,500 | 998314 | ₹2,40,000 |
| Monthly cloud hosting | 998315 | ₹18,000 |
| Application support retainer | 998313 | ₹35,000 |
| Taxable value | ₹2,93,000 | |
| CGST 9% | ₹26,370 | |
| SGST 9% | ₹26,370 | |
| Invoice total | ₹3,45,740 |
TDS note: If the client deducts income-tax TDS on the payment, the deduction does not reduce the GST charged. GST is calculated on the full taxable value; TDS is adjusted when the payment is received. See TDS on invoices.
Export variant: If the same services were supplied to a client in Singapore under an LUT, the invoice would show the same SACs, ₹2,93,000 (or the foreign-currency equivalent) as the value, and zero IGST with the LUT reference.
How should IT businesses set up invoicing?
- Create service items for each type of work with its SAC (998313, 998314, 998315, etc.).
- Choose the right digits: 4 (9983) if previous-year AATO was up to ₹5 crore; 6 above that. Many firms use 6 digits anyway for clarity. See HSN code digits on invoice.
- Set up recurring invoices for retainers, hosting and AMC so they go out on schedule. See recurring invoices.
- Handle multi-currency for export clients, with the LUT reference printed on the invoice.
- Apply place-of-supply rules to decide CGST+SGST vs IGST. See place of supply rules.
- Issue credit notes for credits or disputed hours with the same SAC.
Billing Software by Betterwork supports recurring invoices, multi-currency invoicing and SAC on each service item, which suits IT firms and freelancers billing both Indian and overseas clients.
What should an IT services invoice contain?
Beyond the SAC, a GST tax invoice for IT services needs the standard particulars. A quick checklist for service invoices:
- Supplier's name, address and GSTIN
- A consecutive invoice number unique for the financial year
- Invoice date
- Recipient's name, address and GSTIN (for B2B)
- Place of supply, with the state name and code, for inter-state supplies
- Description of service and SAC
- Taxable value, after any discount
- Rate and amount of CGST and SGST, or IGST
- Whether tax is payable on reverse charge
- Signature or digital signature
For the full list with explanations, see mandatory fields on a GST invoice.
When is the invoice due for IT services?
For services, the tax invoice should generally be issued within 30 days from the date of supply of the service. This matters for monthly retainers and milestone billing:
- Monthly retainer: raise the invoice at the end of each month, or as per the contract's billing date.
- Milestone-based development: where the contract ties payment to milestones, the invoice is generally due on or before the date of completion of each milestone.
- Annual licence or AMC paid upfront: an advance received for services is generally taxable on receipt, so issue a receipt voucher or invoice promptly.
How does e-invoicing apply to IT companies?
IT companies whose aggregate turnover exceeds the notified e-invoicing threshold must generate an IRN for B2B invoices, including service invoices and export invoices. The SAC must be a valid code in the portal master, and the "is service" flag is set for service lines. Exports also need e-invoices when the business is in scope. See what is e-invoicing.
Example: a freelancer below ₹5 crore
A Bengaluru freelance developer with AATO of ₹42 lakh (registered voluntarily) bills a Delhi start-up for an app prototype:
| Line | SAC | Amount |
|---|---|---|
| App prototype design and development | 9983 | ₹1,20,000 |
| IGST 18% | ₹21,600 | |
| Total | ₹1,41,600 |
Because AATO is up to ₹5 crore, the 4-digit heading 9983 meets the minimum, though 998314 would be more precise. The supply is inter-state (Karnataka to Delhi), so IGST applies.
What about IT staffing and manpower supply?
Some IT firms place developers at a client's site on a time-and-material basis where the client directs the work. Depending on the contract, this may be an IT development or support service (998313, 998314) or a manpower supply service under heading 9985 (support services), which in the official scheme includes employment services such as personnel search and supply of personnel. The distinction depends on who controls the work and what the contract promises: a deliverable, or people. Read the contract carefully and choose the code that reflects its substance. The rate should then be checked in the services rate notification for that heading.
Quick checklist for IT invoices
- Correct SAC for each line, at 4 or 6 digits as required
- Place of supply and CGST/SGST vs IGST
- LUT reference for zero-rated exports
- IRN and QR code if you are above the e-invoicing threshold
- Invoice issued within 30 days of supply or on milestone completion
How should an IT firm map its service catalogue to SAC?
Most IT companies sell a mix of services, and each line on the invoice should carry the code that best describes it.
| Service line | Where to look in the scheme |
|---|---|
| Custom software development | IT design and development services under 9983 |
| Website and app maintenance | IT support or other IT services under 9983 |
| Cloud hosting and infrastructure | Hosting and IT infrastructure provisioning under 9983 |
| Software licences downloaded or accessed online | Check whether the supply is goods or a service before coding |
| Training workshops | Education and training services, not 9983 |
| Hardware sold with a project | A goods HSN, not a SAC |
- List every service you invoice from the last year's sales register.
- Match each to the closest SAC using the explanatory notes in the Scheme of Classification of Services.
- Split mixed invoices into separate lines when the services fall under different codes.
- Save the mapping in your item master so every invoice uses it.
- Review it yearly, and whenever you launch a new service.
Common mistakes in IT service invoicing
- Using 9983 for everything when 6 digits are required. Businesses above ₹5 crore AATO must show 6 digits.
- Using an HSN code for software development. Development is a service; the code must start with 99.
- Treating hardware repair as an IT service. Repair falls under heading 9987.
- Charging IGST on exports made under LUT. Under an LUT, exports go without IGST.
- Reducing GST because of TDS. TDS is an income-tax deduction; GST is on the full value.
- Lumping distinct services into one line. Separate lines with correct SACs make GSTR-1 Table 12 accurate.
Key takeaways
- IT services are in SAC group 99831 under heading 9983.
- 998313 is consulting and support, 998314 development, 998315 hosting, 998316 network management, 998319 other.
- Domestic IT services are generally taxed at 18%; qualifying exports are zero-rated.
- Software on physical media is goods (8523), while downloads fall under 998434.
- Show 4 or 6 digits according to previous-year AATO, and keep SACs in your service item master.
This guide is general information, not tax advice. Rules last checked on 20 October 2026; confirm with your tax professional for your situation.