Information Technology Design and Development Services

What this SAC code covers

The default SAC for freelance software developers, UI/UX designers, and product engineers building custom applications, websites, mobile apps, or internal tools.

Common services billed under SAC 998314

• Web app development
• Mobile app development
• API development
• UI/UX design
• Custom software

GST split: CGST, SGST, and IGST

The 18% GST on SAC 998314 splits depending on whether the supply is intra-state or inter-state:

Statutory reference

Notification 11/2017-CT(R) dated 28 June 2017, Schedule II, Heading 9983 (iii) — "Other professional, technical and business services" — taxable at 18%. Reaffirmed in Notification 20/2019-CT(R) and unchanged through subsequent rate-rationalisation council meetings.

Place of supply

Section 12(2)(a) of the IGST Act, 2017 — location of the registered recipient. For a Karnataka developer billing a Maharashtra B2B client, place of supply is Maharashtra → inter-state → IGST 18%. The physical work location is irrelevant.

Export-of-service treatment

Zero-rated under Section 16 of the IGST Act when the client is outside India and payment lands in convertible forex (USD/EUR/GBP/etc.). File LUT once per financial year on the GST portal before raising the first export invoice; renew by 31 March. ~60% of freelance Indian developers serve foreign clients via Upwork/Toptal/direct — this is the most commonly exercised export treatment on the platform.

Reverse charge (RCM)

Not under reverse charge. Not under reverse charge — the supplier collects and remits GST in the normal forward-charge manner. Reverse charge under Section 9(3) of the CGST Act applies only to a notified list (GTA services, advocate services, sponsorship, director-fee payments by companies, and a handful of others).

Composition scheme for services

Freelancers and small service businesses with aggregate turnover under Rs. 50 lakh in the prior financial year may opt for the composition scheme for services and pay GST at a flat 6% instead of the standard 18%, in exchange for forgoing input tax credit. Useful when your input costs are minimal and your clients do not need ITC (i.e., B2C-heavy practices). Opt in via Form GST CMP-02 on the GST portal at the start of the FY.

Input Tax Credit for the client

Fully claimable by the business client when used for the business — covers nearly all software development for B2B SaaS, internal-tool builds, and product engineering engagements. Not in the Section 17(5) blocked-credit list.

GSTR-1 reporting

Reported in GSTR-1 Table 12 (HSN/SAC summary) and Table 4A (B2B invoices). Foreign-client export invoices flow into Table 6A. Most common SAC by invoice count for Indian freelance developers — make sure it is set correctly on every invoice to keep your client’s GSTR-2B reconciliation clean.

Worked example

Priya, a freelance UI/UX designer registered for GST in Karnataka (state code 29), invoices a fintech startup in Maharashtra (state code 27) Rs. 1,00,000 for a 4-week design sprint. The supplier (Priya) is in KA, the recipient is in MH — Section 12(2)(a) of the IGST Act makes this an inter-state supply, so IGST applies at 18%.

Invoice of Rs. 1,00,000 under SAC 998314:

• Intra-state client (same state):
  • CGST @ 9%: Rs. 9,000
  • SGST @ 9%: Rs. 9,000
  • Invoice total: Rs. 1,18,000
• Inter-state client (different state):
  • IGST @ 18%: Rs. 18,000
  • Invoice total: Rs. 1,18,000

Related SAC codes

If SAC 998314 does not exactly fit your service, consider these alternatives:

• SAC 998313 — IT Consulting and Support Services — IT advisory, architecture review and ongoing technical support.
• SAC 998315 — Hosting and IT Infrastructure Provisioning — Server hosting, cloud infrastructure and managed-service provisioning.
• SAC 998316 — IT Infrastructure and Network Management — Network design, monitoring, on-call infrastructure operations.
• SAC 998319 — Online Content and Database Access Services — Hosted content, database access and SaaS-style content delivery.

Related GST terms

Plain-English definitions for the GST concepts behind this SAC:

• GSTR-1 — Monthly or quarterly return of outward supplies (sales) filed by every registered taxpayer.
• GSTR-3B — Monthly summary return where you pay GST liability and claim Input Tax Credit.
• GSTR-2B — Auto-drafted, static monthly ITC statement showing which inward supplies you can claim.
• CGST, SGST, and IGST — Three GST components: Central GST, State GST, and Integrated GST.
• SAC (Services Accounting Code) — 6-digit code that classifies services for GST reporting (the services equivalent of HSN).

Key rules to remember

• SAC is mandatory on every B2B invoice when your aggregate turnover in the preceding financial year was Rs. 5 crore or more. For freelancers below that, SAC is optional but recommended.
• Use 6-digit SAC on invoices issued to GST-registered customers; 4-digit for unregistered customers in B2CS supplies.
• GSTIN-to-state mapping determines intra-state vs inter-state. The first two digits of your GSTIN and your client's GSTIN tell the system which split to apply.
• Place of supply may override location for some services (e.g., events, training). Verify under Section 12 of the IGST Act if your service has a defined place of supply rule.

Common mistakes (CA-flagged)

• Using 998313 (IT consulting) for engagements where the deliverable is actual code or a shipped product — 998313 is for advisory and ongoing support; 998314 is for design + build. Misclassifying creates Table 12 inconsistencies and can flag ITC at audit.
• Using 998311 (Management Consulting) for software work because both the dev and the client see it as "consulting." 998311 is reserved for strategy / operations / change management — never software.
• Charging 18% IGST on a foreign-client invoice when you have an active LUT. With the LUT, the invoice should show GST at 0% (zero-rated supply). The LUT is what enables the zero-rated treatment without an upfront IGST payment + refund cycle.

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