GST on Services — Rates, SAC Codes & Exempt Services

Q: What is GST rate on consulting or freelance services?

GST rate on consulting, freelancing, and professional services is 18% (SAC code 9983 / 998399 for other professional services; 998314 for IT software). This applies whether you are a freelance designer, consultant, coach, or agency. If your annual turnover from these services exceeds ₹20 lakh (₹10 lakh for special category states), GST registration is mandatory. You charge 18% GST to your clients (IGST for inter-state, CGST+SGST for intra-state), file GSTR-1 and GSTR-3B, and can claim ITC on business-related purchases. Export of services is zero-rated — no GST on invoices to foreign clients (LUT-backed or refund route).

Q: Is healthcare exempt from GST?

Yes. Healthcare services provided by clinical establishments, authorised medical practitioners, and paramedics are fully exempt from GST under Entry 74 of the GST Exemption Notification (12/2017-CT). This includes inpatient and outpatient services, diagnostics, ambulance services, and approved blood banks. However, cosmetic surgery for aesthetic purposes (not medically necessary), hair transplant, and similar procedures ARE taxable at 18%. Medicines and medical devices sold separately are taxable at applicable rates (0%, 5%, or 12%) — the exemption covers only the service component of healthcare.

Q: GST on software services?

GST on software and IT services is 18%. SAC code 998314 covers software development and production; 998315 covers software supply / licensing. All IT-enabled services — BPO, KPO, data analytics, cloud services, SaaS — are taxed at 18%. If IT services are provided to a client outside India and payment is in foreign currency, it qualifies as export of services and is zero-rated (0% GST). For B2B supply within India, reverse charge mechanism (RCM) may apply in specific cases (e.g., import of services from an unregistered foreign vendor).

Q: GST on hotel room below ₹7,500?

Hotel accommodation with room tariff (published/declared rate) below ₹7,500 per night is taxed at 12% GST. Rooms at ₹7,500 and above per night are taxed at 18% GST. This threshold was revised as part of the July 2022 GST rate rationalization. Note: the rate is based on the declared tariff or the actual transaction value (whichever is applicable per the GST rules). Budget guesthouses and homestays with tariff under ₹1,000/night through specified platforms may have different treatment — check with your accountant for edge cases.

Q: What SAC code for IT services?

Common SAC codes for IT and technology services: 998314 — Development, production and publishing of software; 998315 — IT infrastructure and network management; 998316 — IT support and maintenance; 998313 — Computer facilities management; 998311 — Data processing; 998312 — Data storage and backup; 9984 — Telecommunications, broadcasting, and internet services (18% GST). When issuing invoices, always mention the 6-digit SAC code for turnover above ₹1.5 crore. For GSTR-1, SAC code reporting is similar to HSN code requirements based on turnover thresholds.

Updated: 3 June 2026

GST on services is classified using SAC (Service Accounting Code). The default rate is 18% for most services. Key exceptions: healthcare and education are 0% (exempt); restaurant (non-AC, no alcohol) is 5%; hotel rooms below ₹7,500/night are 12%; air travel (economy) is 5%; public road/rail transport (non-AC) is 5%; life insurance is 18% (1st year premium) and 12% (renewal); banking services range from exempt to 18% depending on the type of service. Export of services is zero-rated.

18% GST default rate on most services — consulting, IT, CA fees, telecom, banking (taxable). Check SAC code for your service.

GST Rates on Common Services — With SAC Codes

Service	SAC Code	GST Rate	Notes
Restaurant (non-AC, no alcohol)	9963	5%	No ITC available
Restaurant (AC or with alcohol)	9963	18%	ITC available
Restaurant in hotel (room rate ≥ ₹7,500)	9963	18%	Regardless of AC
Hotel accommodation (< ₹7,500/night)	9963	12%	Based on declared tariff
Hotel accommodation (≥ ₹7,500/night)	9963	18%	Revised July 2022
Healthcare services	9993	0% (Exempt)	Clinical establishments only
Educational services (school/college)	9992	0% (Exempt)	Recognised curriculum
Coaching / tuition centres	9992	18%	Not recognised institutions
Air travel — economy class	9964	5%	No ITC
Air travel — business class	9964	12%	ITC available
Road transport (non-AC, public)	9964	0% (Exempt)	State transport, local buses
Cab / radio taxi / OLA / Uber	9964	5%	No ITC; ECO liable under 9(5)
CA / CMA / legal services (B2B)	9982	18%	RCM for individual advocate to business
IT software development / consulting	998314	18%	Export = 0% under LUT
Telecom services	9984	18%	Mobile, broadband, internet
Construction (residential, affordable)	9954	1%	No ITC; affordable housing
Construction (other residential)	9954	5%	No ITC; under-construction
Construction (commercial)	9954	12%	With ITC
Life insurance (1st year premium)	9971	18%	On gross premium
Life insurance (renewal premium)	9971	12%	Reduced rate from 2nd year
Banking — transaction fees, processing	9971	18%	Interest on loans is exempt

Services Exempt from GST

The following services are fully exempt under the GST exemption notifications (12/2017-CT and 9/2017-IT). No GST is charged and the supplier cannot claim ITC on inputs used for exempt services.

Exempt Service	SAC	Condition / Scope
Healthcare by clinical establishments	9993	All inpatient, OPD, diagnostic, ambulance services
Education (school to university)	9992	Recognised curriculum only; coaching is taxable
Agricultural services	9986	Cultivation, harvesting, agri extension services
Public passenger transport (non-AC)	9964	Metered cabs, stage carriages, railways (non-AC)
Services to foreign diplomatic missions	–	Entry in exemption list
Services by RBI, SEBI, IRDAI	9971	Regulatory bodies
Religious and charitable services	9994/9995	Registered trusts providing eligible services
Interest on loans and advances	9971	Core banking activity; processing fee is taxable
Funeral, burial, crematorium	9993	Fully exempt

Frequently Asked Questions

What is GST rate on consulting or freelance services?

GST rate on consulting, freelancing, and professional services is 18% (SAC code 9983 / 998399 for other professional services; 998314 for IT software). This applies whether you are a freelance designer, consultant, coach, or agency. If your annual turnover from these services exceeds ₹20 lakh (₹10 lakh for special category states), GST registration is mandatory. You charge 18% GST to your clients (IGST for inter-state, CGST+SGST for intra-state), file GSTR-1 and GSTR-3B, and can claim ITC on business-related purchases. Export of services is zero-rated — no GST on invoices to foreign clients (LUT-backed or refund route).

Is healthcare exempt from GST?

Yes. Healthcare services provided by clinical establishments, authorised medical practitioners, and paramedics are fully exempt from GST under Entry 74 of the GST Exemption Notification (12/2017-CT). This includes inpatient and outpatient services, diagnostics, ambulance services, and approved blood banks. However, cosmetic surgery for aesthetic purposes (not medically necessary), hair transplant, and similar procedures ARE taxable at 18%. Medicines and medical devices sold separately are taxable at applicable rates (0%, 5%, or 12%) — the exemption covers only the service component of healthcare.

GST on software services?

GST on software and IT services is 18%. SAC code 998314 covers software development and production; 998315 covers software supply / licensing. All IT-enabled services — BPO, KPO, data analytics, cloud services, SaaS — are taxed at 18%. If IT services are provided to a client outside India and payment is in foreign currency, it qualifies as export of services and is zero-rated (0% GST). For B2B supply within India, reverse charge mechanism (RCM) may apply in specific cases (e.g., import of services from an unregistered foreign vendor).

GST on hotel room below ₹7,500?

Hotel accommodation with room tariff (published/declared rate) below ₹7,500 per night is taxed at 12% GST. Rooms at ₹7,500 and above per night are taxed at 18% GST. This threshold was revised as part of the July 2022 GST rate rationalization. Note: the rate is based on the declared tariff or the actual transaction value (whichever is applicable per the GST rules). Budget guesthouses and homestays with tariff under ₹1,000/night through specified platforms may have different treatment — check with your accountant for edge cases.

What SAC code for IT services?

Common SAC codes for IT and technology services: 998314 — Development, production and publishing of software; 998315 — IT infrastructure and network management; 998316 — IT support and maintenance; 998313 — Computer facilities management; 998311 — Data processing; 998312 — Data storage and backup; 9984 — Telecommunications, broadcasting, and internet services (18% GST). When issuing invoices, always mention the 6-digit SAC code for turnover above ₹1.5 crore. For GSTR-1, SAC code reporting is similar to HSN code requirements based on turnover thresholds.

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