GST on Services in India — 18%, 5% or Exempt?

GST on consulting, freelancing and professional services is 18% (SAC 9983 / 998399; 998314 for IT and software). This applies whether you are a freelance designer, consultant, coach or agency. If your annual service turnover exceeds ₹20 lakh (₹10 lakh in special-category states), GST registration is mandatory. You charge 18% GST (IGST inter-state, CGST+SGST intra-state), file GSTR-1 and GSTR-3B, and can claim ITC on business purchases. Export of services is zero-rated.

GST on software and IT services is 18%. SAC 998314 covers software development and production; 998315 covers IT infrastructure, hosting and SaaS; 998313 covers IT support. All IT-enabled services — BPO, KPO, data analytics, cloud and SaaS — are taxed at 18%. If the service is supplied to a client outside India for foreign-currency payment, it qualifies as export of services and is zero-rated (0% GST) under LUT or the refund route.

Common SAC codes for IT and technology services are: 998314 — software development, production and publishing; 998315 — IT infrastructure and hosting; 998313 — IT consulting and support; 998311 — data processing; 998399 — other professional and technical services. The 6-digit SAC must be shown on tax invoices, and SAC reporting in GSTR-1 follows the same turnover-based thresholds as HSN codes for goods.

A SAC (Services Accounting Code) classifies services under Chapter 99 of the GST tariff, while an HSN code classifies goods. Both determine the applicable GST rate and both must appear on the tax invoice. Services all begin with 99 (for example 9983 for professional services, 9963 for accommodation and food, 9954 for construction). Reporting the correct SAC in GSTR-1 is mandatory above prescribed turnover limits.

Yes. The GST 2.0 rationalisation effective 22 September 2025 moved to a two-slab 5% / 18% structure (plus a 40% demerit rate on sin and luxury items) and withdrew most 12% and 28% slabs. For services, the biggest changes were hotel rooms up to ₹7,500/night dropping from 12% to 5% (no ITC), the 12% slab on works-contract/construction services shifting to 18%, and individual life and health insurance becoming fully exempt. Core 18% professional-service rates were retained.

Yes. Healthcare services provided by clinical establishments, authorised medical practitioners and paramedics are fully exempt from GST. This covers inpatient and outpatient treatment, diagnostics, ambulance services and approved blood banks. However, purely cosmetic procedures — aesthetic surgery, hair transplant and similar — are taxable at 18%. Medicines and medical devices sold separately follow their own product-wise GST rates; the exemption covers only the healthcare service itself.

Education provided by a recognised school, college or university offering an approved curriculum (up to higher secondary and recognised degrees) is exempt from GST, along with related services like transport, catering and admission. However, private coaching classes, tuition centres and skill or training institutes that do not lead to a recognised qualification are taxable at 18%.

No — not for individuals. Since 22 September 2025 under GST 2.0, all individual life insurance policies (term, ULIP, endowment) and all 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 to attract 18% GST.

Key exempt services include healthcare by clinical establishments, education with a recognised curriculum, individual life and health insurance (since 22 Sep 2025), most agricultural services, non-AC public passenger transport, services by RBI/SEBI/IRDAI, interest on loans and advances (bank processing fees remain taxable), and funeral, burial and crematorium services. A supplier of exempt services generally cannot claim ITC on inputs used for them.

Under GST 2.0, hotel rooms with a tariff up to ₹7,500 per night are taxed at 5% without ITC (reduced from 12%), and rooms above ₹7,500 per night remain at 18% with ITC. Rooms priced at ₹1,000 per night or below are exempt. A restaurant inside a hotel with any room tariff of ₹7,500 or more is treated as specified premises and charges 18%.

Passenger transport by economy-class air is 5% (no ITC); business and premium cabins are 18%. Cab aggregators like Ola and Uber charge 5% with the platform liable under Section 9(5). Goods transport by a GTA can be 5% without ITC or 18% with ITC. Non-AC public passenger transport (stage carriages, metro, non-AC rail) is exempt. Courier and freight forwarding are 18%.

Most standalone restaurants charge 5% GST without ITC, for both dine-in and takeaway, including cloud kitchens. Restaurants in specified premises — a hotel with a declared room tariff of ₹7,500 or more per night — charge 18% with ITC. Food ordered through Zomato or Swiggy is taxed at 5%, collected and paid by the platform as an e-commerce operator.

No output GST is charged — export of services is a zero-rated supply. A service qualifies as export when the supplier is in India, the recipient is outside India, the place of supply is outside India, and payment is received in convertible foreign exchange. You can either supply under a Letter of Undertaking (LUT) without paying tax, or pay IGST and claim a refund. ITC on inputs used for export remains fully available.

Under RCM the recipient pays GST instead of the supplier. For services it commonly applies to legal services by an advocate to a business, goods transport agency (GTA) services, import of services from abroad, sponsorship to a body corporate, and a director's non-employee remuneration. The recipient pays the tax in cash through GSTR-3B and can then claim it as ITC where the input is used for taxable business supplies.

Yes, if you supply taxable services at 18% (or export under LUT). You can claim Input Tax Credit on GST paid on business inputs — rent, software, professional fees, equipment — provided you hold a valid tax invoice and it appears in your GSTR-2B. ITC is not available when you supply at a 5%-no-ITC rate or make exempt supplies; in those cases the input GST becomes a cost.