GST on Services in India —
18%, 5% or Exempt?
The correct GST rate for every service — consulting, IT, restaurant, hotel, transport, insurance and more — with SAC codes, RCM, export and Input Tax Credit rules under GST 2.0.
Services are classified using a SAC (Service Accounting Code) and, under the GST 2.0 two-slab structure effective 22 September 2025, are taxed mainly at 18% (the default, with ITC) or 5% (without ITC). Key carve-outs: healthcare, education and individual life & health insurance are exempt; transport, economy air travel and hotel rooms up to ₹7,500/night are 5%; and export of services is zero-rated.
GST Rates on Common Services — With SAC Codes
The GST rate and SAC code for every common service in India, updated for the GST 2.0 rate structure. Rates without ITC are marked; the default for professional and business services is 18% with full Input Tax Credit.
| Service | SAC | GST Rate | Notes |
|---|---|---|---|
| Consulting / professional / freelance | 9983 | 18% | With ITC; export zero-rated |
| IT / software development / SaaS | 998314 | 18% | Export = 0% under LUT |
| CA / CMA / legal (B2B) | 9982 | 18% | RCM for advocate → business |
| Telecom — mobile / broadband | 9984 | 18% | With ITC |
| Restaurant (standalone) | 9963 | 5% | No ITC |
| Restaurant in specified premises | 9963 | 18% | Hotel tariff ≥ ₹7,500 |
| Hotel room ≤ ₹7,500 / night | 9963 | 5% | No ITC (GST 2.0, was 12%) |
| Hotel room > ₹7,500 / night | 9963 | 18% | With ITC |
| Air travel — economy | 9964 | 5% | No ITC |
| Air travel — business / premium | 9964 | 18% | With ITC |
| Cab / Ola / Uber | 9964 | 5% | No ITC; ECO liable u/s 9(5) |
| Goods transport (GTA) | 9965 | 5% | 5% no ITC or 18% with ITC (option) |
| Works contract / construction service | 9954 | 18% | 12% slab withdrawn under GST 2.0 |
| Healthcare services | 9993 | Exempt | Clinical establishments |
| Education (recognised curriculum) | 9992 | Exempt | Coaching is 18% |
| Individual life & health insurance | 9971 | Exempt | Exempt since 22 Sep 2025 |
| Group / corporate insurance | 9971 | 18% | Individual policies exempt |
Rates reflect the GST 2.0 two-slab structure effective 22 September 2025. Always confirm the current SAC-wise rate on the GST portal before invoicing.
18% With ITC vs 5% Without ITC
GST 2.0 removed most 12% and 28% service slabs, leaving two working rates for services. The choice usually turns on whether Input Tax Credit is allowed: mass-use services carry a lower 5% but block ITC, while business and professional services stay at 18% with full credit.
Low rate — no ITC
- Standalone restaurants & cloud kitchens
- Hotel rooms up to ₹7,500/night
- Economy air travel
- Cab aggregators (Ola / Uber)
- Goods transport (GTA concessional option)
- Input Tax Credit not available
Default — full ITC
- Consulting, IT, CA, legal & professional
- Telecom, advertising & event services
- Works contract & construction service
- Hotel rooms above ₹7,500/night
- Business & premium air travel
- Full input-tax credit available
A 5% service rate almost always comes without Input Tax Credit — GST paid on your rent, software, equipment and vendor bills becomes an embedded cost you price in. If you buy a lot of taxable inputs, an 18%-with-ITC classification can work out cheaper after credits than a 5%-no-ITC one.
Not sure which rate and SAC code apply to your service?
Get My GST Rate →Services Exempt From GST
The services below are fully exempt under the GST exemption notifications (12/2017-CT and later amendments). No GST is charged, and the supplier generally cannot claim ITC on inputs used for exempt supplies. See our full GST exemption list.
| Exempt Service | SAC | Condition / Scope |
|---|---|---|
| Healthcare by clinical establishments | 9993 | Inpatient, OPD, diagnostics, ambulance |
| Education (school to university) | 9992 | Recognised curriculum; coaching is taxable |
| Individual life & health insurance | 9971 | Exempt since 22 Sep 2025 (GST 2.0) |
| Agricultural services | 9986 | Cultivation, harvesting, agri-extension |
| Public passenger transport (non-AC) | 9964 | Stage carriages, metro, non-AC rail |
| Services by RBI / SEBI / IRDAI | 9971 | Regulatory bodies |
| Interest on loans & advances | 9971 | Processing fee is still taxable |
| Funeral, burial & crematorium | 9993 | Fully exempt |
Cosmetic surgery, hair transplant and similar aesthetic procedures are NOT exempt — they are taxed at 18%.
From 22 September 2025, all individual life insurance (term, ULIP, endowment) and individual health insurance policies — including family-floater and senior-citizen plans — are exempt from GST (down from 18%). Group and employer-sponsored insurance policies continue at 18%.
SAC Codes — How Services Are Classified
Services use a 6-digit SAC (Service Accounting Code) under Chapter 99 — the services equivalent of an HSN code. The right SAC decides your rate and must be shown on the tax invoice. Common IT/tech SACs:
- 998314 — Software development, production & publishing
- 998315 — IT infrastructure & hosting / SaaS
- 998313 — IT consulting & support
- 998311 — Data processing & management
- 998399 — Other professional / technical services
When Must a Service Provider Register?
A service provider must obtain GST registration once aggregate turnover crosses:
- ₹20 lakh/year — most states
- ₹10 lakh/year — special-category states
Registration can also be mandatory regardless of turnover — for inter-state supplies, e-commerce operators, and those liable under reverse charge. Below the threshold, GST is optional but voluntary registration is allowed to claim ITC and issue tax invoices.
Crossing ₹20 lakh in service revenue? Get registered the right way.
Start GST Registration →Export of Services & Reverse Charge
Export of services — a service to a client outside India, paid in convertible foreign exchange — is a zero-rated supply. You charge 0% GST and either supply under a Letter of Undertaking (LUT) without paying tax, or pay IGST and claim a refund. See GST on export of services.
Under the Reverse Charge Mechanism (RCM), the recipient pays GST instead of the supplier. Common service RCM cases:
| Service | GST | Who Pays |
|---|---|---|
| Legal services by an advocate → business | 18% | Recipient (RCM) |
| GTA (goods transport) → registered person | 5% | Recipient (RCM option) |
| Import of services from abroad | 18% | Recipient (RCM) |
| Director's remuneration (non-employee) | 18% | Company (RCM) |
| Sponsorship services to a body corporate | 18% | Recipient (RCM) |
RCM GST is paid in cash in GSTR-3B; eligible RCM tax can then be claimed back as ITC where the input is used for business.
Getting the SAC code and rate right is only half the job — export invoices under LUT, RCM self-payment, and the 5%-no-ITC trade-off each carry their own compliance. A wrong classification means either short-payment demands or ITC you leave on the table.
Frequently Asked Questions
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