SAC Code for Investment Advisory, Mutual Fund & Loan Processing Services
Are you a financial advisor, mutual fund distributor, or loan processor in India struggling with GST compliance? One of the most common points of confusion is identifying the correct Services Accounting Code (SAC). This simple code is the backbone of GST classification for services, yet finding the right one can feel like searching for a needle in a haystack. Understanding the correct SAC code for investment advisory and related financial services is not just a matter of good bookkeeping; it’s a legal requirement for accurate invoicing and tax filing. This guide will simplify the process by detailing the specific SAC codes for investment advisory, mutual funds, and loan processing services, ensuring you stay compliant and avoid unnecessary penalties. At its core, the right SAC code for financial services ensures that your business communicates clearly with the tax authorities, paving the way for smooth and seamless operations.
What are SAC Codes and Why Are They Essential for Your Business?
Before diving into the specific codes for your industry, it’s crucial to understand what SAC codes are and the foundational role they play in the Goods and Services Tax (GST) regime in India. Think of a SAC code as a unique identifier or a classification system designed specifically for services. Just as HSN (Harmonized System of Nomenclature) codes are used to categorize goods, SAC codes are used to categorize services. For a detailed breakdown, see our HSN & SAC Code Complete Guide – Choosing the Correct Code for GST. This systematic classification, introduced by the Central Board of Indirect Taxes and Customs (CBIC), creates a uniform framework for identifying, measuring, and taxing services across the country. For a financial services professional, treating this code as a mere formality is a significant risk. It directly impacts your tax liability, the validity of your invoices, and your overall compliance health, making it an indispensable component of your business’s financial administration.
The Role of SAC Codes in GST Compliance
The primary function of SAC codes is to help the government and taxpayers identify the exact nature of a service being provided. This precise identification is the first step in ensuring proper GST compliance. Their role is multifaceted and critical for several reasons.
First, SAC codes are directly linked to the applicable GST rate. The GST Council has specified different tax rates for different services—5%, 12%, 18%, and 28%. By correctly identifying your service with the appropriate SAC code, you can determine the correct tax rate to charge your clients. Using the wrong code could lead to either overcharging your client (making your services less competitive) or undercharging (leading to a tax shortfall, which can attract interest and penalties from the tax department).
Second, these codes are mandatory for filing your GST returns. In the GSTR-1 form, which details your outward supplies, there is a dedicated section (Table 12) for the HSN/SAC summary. Here, you must report the total taxable value of services supplied under each SAC code. For more details on the filing process, refer to our guide on How to File GST Returns Online: A Step-by-Step Guide of the GST Filing Process & Procedure. Accurate reporting in this section is non-negotiable and is cross-verified by the GSTN’s digital systems. Any discrepancies can trigger automated notices and lead to further scrutiny from tax officials, creating significant administrative burdens for your business.
How to Find the Correct SAC Code
The structure of a SAC code is designed for logical classification. Every SAC code is a 6-digit number. The first two digits represent the chapter of the service category (e.g., Chapter 99 for ‘Services’), the next two digits represent the heading (e.g., 71 for ‘Financial and related services’), and the final two digits represent the specific nature of the service or the sub-heading.
For example, a code like 997151 can be broken down:
- 99: The Chapter, which is common for almost all services.
- 71: The Heading, which points towards ‘Financial and related services’.
- 51: The Sub-heading, which specifies ‘Services of portfolio managers’.
While this guide provides specific codes, it is always best practice to refer to the official source for the most up-to-date information, as codes and rates can be amended over time.
Actionable Tip: You can find the complete list of services and their corresponding SAC codes on the official CBIC GST portal. It is advisable to bookmark this resource for future reference. For a comprehensive search, visit the CBIC GST Services and SAC Code List.
The Correct SAC Code for Investment Advisory Services
For professionals offering financial planning and investment guidance, identifying the precise SAC code is paramount for GST compliance. The services you provide are highly specialized, and the tax system has a specific classification for them. Misclassifying these services can lead to incorrect GST application and potential disputes with tax authorities. Therefore, understanding the nuances of the designated SAC code investment advisory India is essential for running a compliant and successful practice. The majority of financial advisory services are grouped under a single, comprehensive heading, but it’s the specific sub-heading that truly defines your service for tax purposes.
The Primary SAC Code: Heading 99715
The vast majority of services that are auxiliary or supplementary to core financial operations fall under the broad SAC Heading 99715. The official description for this heading is “Services auxiliary to financial services.” This category is a catch-all for various support services within the financial sector that don’t involve the direct lending of money or holding of deposits. It includes everything from financial consulting and portfolio management to services provided by stockbrokers and insurance agents. For an investment advisor, this heading is your starting point. It signifies that your service is recognized as a supportive element within the larger financial ecosystem, distinct from core banking or insurance services.
Specifics for Investment Advisory Services SAC Code India
Within the broader heading of 99715, the most relevant and accurate code for personalized financial advice is 997151. The description for this code is “Services of portfolio managers.” Although the term “portfolio managers” might sound specific, this SAC code is widely used to cover a broad spectrum of advisory functions.
The following services are appropriately classified under this investment advisory services SAC code India:
- Personalized financial planning and consulting.
- Wealth management services.
- Retirement planning advice.
- Advisory services related to investments in stocks, bonds, and other securities.
- Fee-based investment advisory where you manage or advise on a client’s portfolio.
Essentially, if your core function is to provide expert guidance to clients to help them manage their financial assets and achieve their investment goals, 997151 is the correct code to use. The current GST rate applicable to services falling under this SAC code investment services India is 18%.
Common Mistakes to Avoid
A common point of confusion for financial professionals is distinguishing between pure advisory services and broking services. While they might seem related, the GST framework classifies them differently.
- Investment Advisory (SAC 997151): This code is for providing advice, financial planning, and portfolio management. The primary service is guidance and expertise.
- Stock Broking (SAC 997152): This code is for services related to the execution of trades in securities on behalf of clients. The primary service is intermediation in buying and selling financial instruments.
While some professionals may offer both, it is crucial to use the correct code for each distinct service offered and invoice them separately if necessary to maintain clarity and compliance.
SAC Codes for Mutual Fund and Loan Processing Services
Beyond core investment advisory, many financial professionals and businesses offer a wider range of services, including mutual fund distribution and loan processing. Each of these activities has its own specific SAC code under the GST regime. Using a single generic code for all your financial services is incorrect and can lead to compliance issues. This section will provide a clear breakdown of the specific SAC code mutual fund services and the appropriate SAC code loan processing India, helping you create accurate invoices and file flawless GST returns for every vertical of your business.
Decoding the SAC Code for Mutual Fund Services
For individuals and companies acting as mutual fund distributors or agents, the commission or fee earned is subject to GST. The service provided is one of intermediation—connecting investors with mutual fund companies (Asset Management Companies). The correct SAC code for these activities is 997152.
The description for this code is “Stock broking, commodity broking, and other intermediation services.” While the title mentions stock broking, this code explicitly covers the services provided by mutual fund distributors and agents.
The services covered under mutual fund SAC code for India (997152) include:
- Commissions earned from distributing mutual fund schemes (both upfront and trail commissions).
- Advisory services that are directly linked to the sale or distribution of specific mutual fund products.
- Fees for facilitating Systematic Investment Plans (SIPs), Systematic Transfer Plans (STPs), or other mutual fund transactions.
If your business earns revenue from commissions paid by AMCs for distributing their funds, you must use SAC 997152 on your invoices. This is also the correct mutual funds advisory SAC code when the advice is intrinsically linked to the distribution service. The GST rate applicable to these services is 18%.
Identifying the SAC Code for Loan Processing in India
Another common service in the financial sector is assisting individuals and businesses in securing loans from banks and Non-Banking Financial Companies (NBFCs). This includes services offered by Direct Selling Agents (DSAs), loan aggregators, and other intermediaries. The fees charged for these services, such as processing fees, administrative charges, or documentation fees, are taxable under GST.
The most appropriate loan processing service SAC code India for these activities is 997159. The official description is “Other services auxiliary to financial services, n.e.c (not elsewhere classified).” This code acts as a residual category for auxiliary financial services that do not fit into more specific codes like portfolio management or broking.
Services covered under SAC 997159 include:
- Loan application processing fees.
- Documentation and verification charges related to loans.
- Commission earned by DSAs for sourcing loan customers for banks/NBFCs.
- Administrative fees for managing loan accounts on behalf of a financial institution.
Therefore, if your business facilitates loans and charges a fee for it, 997159 is the correct code to use on your invoices. The GST rate for these services is also 18%.
Here is a summary table for quick reference:
| Service Description | Relevant SAC Code | Applicable GST Rate |
|---|---|---|
| Investment Advisory / Portfolio Mgmt | 997151 | 18% |
| Mutual Fund Distribution | 997152 | 18% |
| Loan Processing / DSA Services | 997159 | 18% |
How to Use SAC Codes in Your Invoicing and GST Filing
Knowing the correct SAC code is only half the battle. The other half is implementing it correctly in your day-to-day business operations, specifically in your invoicing and GST return filing. Proper implementation ensures that your compliance is not just theoretical but practical and audit-proof. It demonstrates a high level of professionalism to your clients and keeps you on the right side of the tax laws, preventing potential disputes, notices, or penalties from the GST department. This section provides actionable steps on how to integrate these codes seamlessly into your financial workflow.
Correctly Mentioning SAC on Your Invoices
Under the GST regime, a tax invoice is a critical legal document. It is mandatory to mention the correct SAC code for the services you provide on every tax invoice you issue to your clients. This brings transparency to the transaction and serves as primary evidence of the nature of the service supplied. Failure to mention the SAC code or mentioning an incorrect one can render the invoice invalid and may cause issues for your client when they try to claim Input Tax Credit (ITC). You can find more details in our GST Input Tax Credit (ITC) Full Guide 2025 – Eligibility, Limits & Common Issues.
Here is a clear example of how to structure a line item on your tax invoice for an investment advisory service:
| Description of Service | SAC Code | Taxable Value | CGST @ 9% | SGST @ 9% | Total |
|---|---|---|---|---|---|
| Investment Advisory Fee | 997151 | ₹10,000 | ₹900 | ₹900 | ₹11,800 |
- Description of Service: Clearly state the service you provided.
- SAC Code: Mention the 6-digit code accurately.
- Taxable Value: This is the value of the service before adding GST.
- CGST & SGST/IGST: Apply the correct tax rate (18% in this case, split into 9% CGST and 9% SGST for intra-state transactions, or 18% IGST for inter-state transactions).
- Total: The final amount payable by the client.
Reporting SAC in Your GSTR-1 Return
After invoicing, the next critical step is to report these details correctly in your monthly or quarterly GSTR-1 return. The GSTR-1 form has a specific section, Table 12 – HSN/SAC wise summary of outward supplies, where you must consolidate the details of all services supplied during the tax period.
The level of detail required for reporting depends on your annual aggregate turnover:
- Turnover up to Rs. 5 crore: You are required to report a minimum of 4-digit SAC codes for all B2B (Business to Business) supplies. While it’s optional for B2C (Business to Consumer) supplies, it is a highly recommended best practice to report them for consistency.
- Turnover above Rs. 5 crore: It is mandatory to report 6-digit SAC codes for all supplies, both B2B and B2C.
Accurate reporting in this summary is crucial. The GSTN portal uses this data to cross-verify information with your clients’ GSTR-2B and to populate the GSTR-3B return. Any mismatch can lead to automated red flags, potentially triggering scrutiny or an audit from the tax authorities. Ensuring that the SAC codes on your invoices match the codes reported in your GSTR-1 is fundamental to maintaining a clean compliance record.
Conclusion
Mastering the correct SAC codes is a non-negotiable aspect of running a financial services business in India. For professionals in this field, accuracy is not just a virtue but a legal necessity. Using the right code ensures you charge the correct GST rate, issue valid invoices, and file accurate returns, thereby safeguarding your business from potential penalties and legal complications.
To recap the key takeaways:
- Use SAC 997151 for investment advisory, portfolio management, and wealth management services.
- Use SAC 997152 for services related to mutual fund distribution and agency commissions.
- Use SAC 997159 for loan processing services, documentation charges, and DSA commissions.
Reiterating the importance of these codes cannot be overstated; they are the foundation of your GST compliance and a reflection of your business’s diligence.
Navigating GST and SAC codes can be complex. Don’t let compliance worries slow down your business. The experts at TaxRobo are here to help you with everything from GST registration to accurate filing. Ensure you always use the right SAC code for investment advisory and other financial services. Contact us today for a hassle-free consultation!
Frequently Asked Questions (FAQs)
1. What is the GST rate for services under SAC 99715?
Answer: The standard GST rate for most services under SAC Heading 99715, including investment advisory (997151), mutual fund distribution (997152), and loan processing (997159), is 18%. It’s always advisable to check the latest notifications from the CBIC for any rate changes.
2. Do I need to mention the SAC code on my invoice if my turnover is below Rs. 5 crore?
Answer: Yes. For businesses with an annual aggregate turnover of up to Rs. 5 crore, it is mandatory to report at least a 4-digit SAC code on invoices issued for B2B supplies. While it’s not mandatory for B2C invoices, it is considered a best practice to include the SAC code on all tax invoices for the sake of clarity, consistency, and complete compliance.
3. What happens if I use the wrong SAC code?
Answer: Using an incorrect SAC code can lead to several significant issues. Firstly, it may result in the application of a wrong GST rate, leading to either an underpayment or overpayment of tax. Underpayment can attract interest and heavy penalties from the GST department. Secondly, it can cause mismatches during GST return reconciliation for both you and your client, potentially leading to the denial of Input Tax Credit (ITC) for your client. Ultimately, it can trigger scrutiny, audits, and legal notices from tax authorities.
4. Is the SAC code the same as the HSN code?
Answer: They are similar in structure and purpose but are used for different categories. HSN (Harmonized System of Nomenclature) codes are internationally recognized 8-digit codes used to classify goods. SAC (Services Accounting Code) codes are 6-digit codes developed by the service tax department in India to classify services. Both systems are used under the GST framework to ensure uniform classification for levying taxes.
