Data Processing and Hosting Services

What this SAC code covers

Covers data processing services, ETL pipelines, hosted databases, and data warehousing services provided to clients.

Common services billed under SAC 998317

• ETL pipelines
• Data warehousing
• Hosted databases
• Batch data processing

GST split: CGST, SGST, and IGST

The 18% GST on SAC 998317 splits depending on whether the supply is intra-state or inter-state:

Statutory reference

Notification 11/2017-CT(R) dated 28 June 2017 — Services Rate Schedule, Heading 9983 / 9982 / 9985 (as applicable), as amended through Notification 7/2024-CT(R).

Place of supply

Section 12 of the IGST Act, 2017 governs place of supply for services where both supplier and recipient are in India. Default: Section 12(2)(a) — location of the registered recipient (B2B) or location of the supplier (B2C, where the recipient address is unavailable). Special rules in Sections 12(3) through 12(14) override this default for events, training, real-estate-related services, transport, and a few other categories.

Export-of-service treatment

Zero-rated supply under Section 16 of the IGST Act, 2017 when (a) the recipient is outside India, (b) the place of supply is outside India, and (c) consideration is received in convertible foreign exchange (or INR where the RBI permits, against FIRC). Two options: (i) file a Letter of Undertaking (LUT) annually on the GST portal and invoice at 0% GST, or (ii) pay IGST on the export and claim refund. Most freelancers serving Upwork / Toptal / direct foreign clients file the LUT route.

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

Generally claimable by the GST-registered business client when the service is used for business purposes — eligibility flows from Section 16 of the CGST Act, subject to the supplier filing GSTR-1 and the invoice appearing in the client’s GSTR-2B. Section 17(5) blocks ITC for personal consumption, motor vehicles below the GVW threshold, club memberships, life insurance, and a handful of other specified categories — most freelancer professional services are not in the blocked list.

GSTR-1 reporting

Reported in GSTR-1 Table 12 (HSN / SAC summary) — mandatory disclosure when prior-year aggregate turnover crossed Rs. 5 crore (6-digit SAC); otherwise 4-digit. B2B invoices flow into Table 4A (regular) or Table 4B (RCM). B2C aggregate into Table 7 (B2CS, intra-state ≤ Rs. 2.5L invoice) or Table 5A (B2CL, inter-state > Rs. 2.5L invoice). Export invoices flow into Table 6A.

Worked example

Aditya, a Hyderabad-based data engineer (TS, state code 36), builds ETL pipelines for a Delhi analytics agency (DL, state code 07). Rs. 1,10,000 for the project. Inter-state → IGST 18%.

Invoice of Rs. 1,10,000 under SAC 998317:

• Intra-state client (same state):
  • CGST @ 9%: Rs. 9,900
  • SGST @ 9%: Rs. 9,900
  • Invoice total: Rs. 1,29,800
• Inter-state client (different state):
  • IGST @ 18%: Rs. 19,800
  • Invoice total: Rs. 1,29,800

Related SAC codes

If SAC 998317 does not exactly fit your service, consider these alternatives:

• 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)

• Picking the wrong SAC because the service overlaps two groups — e.g., using 998311 (Management Consulting) for software development work which actually belongs in 998314. Mismatched SACs do not change the GST rate (both are 18%) but they cause GSTR-1 Table 12 disclosure issues and trigger ITC audit queries at the client end.
• Forgetting that intra-state vs inter-state is driven by the GSTIN state-code mapping, NOT by where the work is physically delivered. A Bangalore-based developer (KA state code 29) coding for a Mumbai client (MH state code 27) is making an inter-state supply (IGST 18%) even if both meet in Bangalore for the kickoff workshop.

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