SAC Code for Business Support, BPO & Outsourcing Services

As a small business owner or consultant providing back-office support, you’ve mastered your services. But when it comes to GST invoicing, one small detail can cause big problems: the SAC code. Getting this six-digit number right is fundamental for your business’s financial health, and finding the correct SAC code for outsourcing services is a critical first step. This code is the backbone of service classification under India’s Goods and Services Tax (GST) regime. Using the correct code is not just a procedural formality; it is absolutely crucial for accurate tax calculation, ensuring seamless compliance with national tax laws, and protecting your business from unnecessary legal and financial penalties that can arise from incorrect filings. This comprehensive guide will break down the specific SAC codes for business support, BPO, and other common outsourcing activities, empowering you to navigate GST with confidence and keep your business compliant.

Understanding SAC Codes and Their Role in GST

Navigating the complexities of the GST system requires a solid grasp of its core components, and the Services Accounting Code (SAC) is one of the most important. For any enterprise involved in providing services, a clear understanding of what these codes represent and why they are so vital is the foundation of good tax governance. This knowledge not only simplifies the compliance process but also safeguards the business against potential errors that can have cascading financial consequences. Properly applying these codes ensures that your invoices are accurate, your tax returns are correctly filed, and your claims for input tax credits are processed smoothly, making it an indispensable part of your financial operations. This is particularly true when trying to apply the correct understanding SAC code for business services to your specific offerings.

What is a SAC Code? A Simple Breakdown

At its core, a Services Accounting Code (SAC) is a unified classification system developed by the Central Board of Indirect Taxes and Customs (CBIC) to categorize all services under the GST framework. Every service that can be provided by a business is assigned a unique six-digit code. This standardization helps the government identify, classify, and apply the correct tax rate to different services consistently across the country. The structure of the code is logical and easy to understand once you break it down, which simplifies the process for business owners.

The 6-digit structure can be broken down as follows:

• First two digits (99): This is a universal prefix for all services. If you see a code starting with “99,” you know it pertains to a service, not a physical good (which uses the HSN code system).
• Next two digits: These digits represent the major category of the service. For example, the digits 85 signify “Business Support Services,” which is a broad category encompassing many outsourcing activities.
• Last two digits: These final two digits provide a detailed, specific description of the service. For instance, within the Business Support category (9985), the digits 91 specify “Call centre services,” making the full code 998591.

Why the Correct SAC Code is Non-Negotiable

Choosing the right SAC code is far more than an administrative task; it’s a critical compliance requirement with significant legal and financial implications. Using an incorrect code, whether by accident or misunderstanding, can disrupt your operations and lead to serious issues with tax authorities. It is essential for every business owner to treat SAC code selection with the diligence it deserves to maintain a clean compliance record and ensure the smooth functioning of their financial processes.

Here’s why getting it right is so important:

• Accurate GST Rates: The primary function of a SAC code is to determine the GST rate applicable to a service. Most business support and outsourcing services fall under the 18% GST slab. Using the wrong code could lead to you charging an incorrect tax rate, resulting in either overcharging your client or underpaying the government, both of which create complications.
• Input Tax Credit (ITC): To claim Input Tax Credit on the services you procure, the SAC codes on your supplier’s invoices must align with the services you received and your own business activities. A mismatch can lead to delays or even rejection of your ITC claims, directly impacting your cash flow.
• GST Return Filing: The SAC code for every service you provide is a mandatory field when filing your GST returns, particularly in the HSN/SAC summary section of the GSTR-1 form. Accurate codes ensure your returns are processed without errors or queries from the GST portal.
• Avoiding Penalties: Tax authorities conduct regular audits and assessments. If they discover that you have been consistently using an incorrect SAC code, it can be viewed as a compliance failure, leading to demand notices, interest on any tax deficit, and significant financial penalties.

Finding the Right SAC Code for Outsourcing Services & BPO in India

Identifying the precise SAC code for outsourcing services is a common challenge for businesses because the term “outsourcing” covers a vast spectrum of activities. From managing customer calls to handling complex financial accounts or IT infrastructure, the nature of the service dictates the code. The GST framework provides specific headings and sub-headings to classify these diverse services accurately. The most relevant category for general Business Process Outsourcing (BPO) and support functions is Heading 9985, which acts as a primary umbrella. However, for more specialized activities, such as Knowledge Process Outsourcing (KPO) in finance, technology, or management, you may need to look at other headings like 9982 or 9983 to ensure your invoicing and tax filings are perfectly aligned with the services you deliver.

Core SAC Codes for Business Support Services (Heading 9985)

For the majority of businesses offering general BPO and back-office support, the primary category to explore is Heading 9985 – Business Support Services. This classification is designed to cover a wide range of administrative, operational, and informational support functions that companies outsource to improve efficiency and reduce costs. If your company provides services like customer support, data entry, transcription, or other non-specialized support, your SAC code will most likely be found under this heading. Understanding the nuances between the different sub-codes within this category is key to pinpointing the one that best describes your specific service offering.

Here are the most common SAC codes under this heading:

• SAC 998591 – Call centre services: This code specifically applies to businesses that manage customer interactions through telephone calls. This includes both inbound services (like customer support and helpdesks) and outbound services (like telemarketing and surveys).
• SAC 998592 – Mailing list compilation and mailing services: If your business involves creating targeted mailing lists for marketing campaigns or managing the physical or electronic mailing process for clients, this is the correct code.
• SAC 998593 – Transcription services: This code is for converting voice recordings into written text. It is commonly used by businesses serving the medical, legal, or media industries for transcribing dictations, interviews, and speeches.
• SAC 998598 – Other information services n.e.c.: The “n.e.c.” stands for “not elsewhere classified.” This is a catch-all code for unique information-based services that do not fit into any other specific category. For example, a custom news clipping or media monitoring service might use this code.
• SAC 998599 – Other support services n.e.c.: Similar to the one above, this is a residual category for general support activities that are not explicitly defined elsewhere. This could include services like data entry, virtual assistance, or other administrative tasks that don’t have a dedicated code.

SAC Codes for Specialized Outsourcing (KPO and Professional Services)

The term “outsourcing” extends far beyond traditional BPO. Many companies now provide high-value Knowledge Process Outsourcing (KPO) and specialized professional services that require a different set of SAC codes. The outsourcing SAC code for companies India is therefore not a one-size-fits-all solution; it must reflect the expert nature of the work being performed. If your business offers services in areas like accounting, IT development, or strategic management consulting, you need to look beyond the general support category (9985) and find the code that precisely matches your professional domain. These services are typically classified under headings related to accounting, legal, technical, and management services.

Accounting & Finance Outsourcing (Heading 9982):

• SAC 998221 – Accounting and bookkeeping services: For firms that handle day-to-day financial record-keeping, ledger management, and preparation of financial statements for clients.
• SAC 998222 – Auditing services: This applies to certified professionals and firms conducting financial audits to verify the accuracy of a company’s financial records.
• SAC 998231 – Payroll processing services: For businesses that manage the entire payroll function for other companies, including salary calculation, tax deductions, and compliance.

IT & Technical Outsourcing (Heading 9983):

• SAC 998315 – Information technology (IT) consulting and support services: This code is for services related to IT infrastructure management, network support, troubleshooting, and providing expert advice on technology strategy.
• SAC 998316 – IT design and development services: Use this for services like custom software development, application design, website development, and creating technological solutions for clients.

Management & Consulting Outsourcing (Heading 9983):

• SAC 998311 – Management consulting and management services: This applies to firms offering strategic advice, business process improvement, operational consulting, and other high-level management guidance.
• SAC 998313 – Market research and public opinion polling services: For businesses that conduct market analysis, consumer surveys, and data collection to provide clients with business intelligence.

Practical Guide: How to Apply Your SAC Code Correctly

Knowing the various SAC codes is only half the battle; the other half is implementing them correctly in your day-to-day business operations. This practical section provides a clear, actionable framework to help you identify the right code for your services and integrate it seamlessly into your invoicing and tax filing processes. Following a systematic approach not only ensures you select the most accurate code but also helps you maintain consistent and compliant documentation, which is crucial for smooth business functioning and for avoiding any potential scrutiny from tax authorities. By making this a standard part of your workflow, you can turn a potentially confusing task into a simple, routine check.

A Step-by-Step Method to Identify Your SAC Code

1. Analyze Your Service: Before you even start searching for a code, write down a detailed and precise description of the primary service you offer to your clients. Avoid vague terms like “outsourcing.” Instead, be specific: are you providing “inbound customer query handling,” “payroll processing,” or “custom software development”? This clarity is the most important step.
2. Use the Official GST Portal: The most reliable source for finding the right code is the government’s official portal. The CBIC website has a services tariff lookup tool where you can search by description to find the relevant SAC code. This ensures you are using the most up-to-date and legally valid codes.
   • Actionable Tip: Check the official CBIC GST Website for the latest SAC codes.
3. Cross-Verify with Your Industry: See what SAC codes are being used by other businesses in your specific niche. While this shouldn’t be your only source, it can serve as a useful benchmark to confirm if you are on the right track.
4. When in Doubt, Consult an Expert: If your service is unique or you are torn between two different codes, it is always best to seek professional advice. A chartered accountant or a GST expert can provide clarity and help you choose the correct code, preventing future complications.

Where to Use the SAC Code in Your Business

Once you have identified the correct SAC code, you must include it in two key places to maintain GST compliance:

• On GST Invoices: It is mandatory to mention the SAC code on every tax invoice you issue to your clients. This should be listed alongside the description of the services provided, ensuring transparency for both you and your client.
• In GST Returns: When filing your GSTR-1, you are required to provide a summary of your sales categorized by HSN/SAC codes. Entering the correct code here is essential for your return to be considered valid and accurate.

What is the GST Rate for Business Support and Outsourcing?

For the vast majority of services discussed in this guide, including those under headings 9985 (Business Support), 9982 (Accounting), and 9983 (Other Professional, Technical and Business Services), the standard applicable GST rate is 18%.

This rate is broken down based on the nature of the transaction:

• Intra-State Transactions (within the same state): The 18% is split into CGST (9%) + SGST (9%).
• Inter-State Transactions (between two different states): The full 18% is charged as IGST.

Conclusion

Navigating the complexities of GST compliance can seem daunting, but understanding its core components, like the Services Accounting Code, makes the process significantly more manageable. From call centres and data entry to specialized IT and financial consulting, every service has its designated code that ensures tax is calculated and paid correctly. Choosing the correct SAC code for outsourcing services is not just a regulatory requirement; it is a fundamental step towards building a compliant, transparent, and legally sound business in India. By taking the time to accurately classify your services, you ensure smooth invoicing, hassle-free credit claims, and peace of mind during tax assessments.

Don’t let GST compliance slow your business down. TaxRobo’s experts can help you identify the right SAC codes, manage your invoicing, and file your returns flawlessly. Contact us today for a free consultation!

Frequently Asked Questions about SAC Codes for BPO & Outsourcing

1. What is the main SAC code for BPO services in India?
For generic BPO services like call centres, the most common code is 998591. However, the correct BPO services SAC code in India depends entirely on the specific service provided. For example, if the BPO provides accounting services, the code would be 998221, and for IT support, it would be 998315. It’s crucial to match the code to the activity.

2. Do I need a different SAC code for domestic vs. international outsourcing services?
No, the SAC code for the service itself remains the same regardless of whether the client is domestic or international. The primary difference lies in the GST treatment. Services exported to international clients are generally considered “zero-rated supplies” under GST, meaning no GST is charged, provided certain legal conditions are met.

3. What happens if I use the wrong SAC code for my business support services?
Using an incorrect SAC code can lead to several negative consequences, including applying the wrong GST rate, which can cause disputes with clients. More seriously, it can lead to the rejection of your Input Tax Credit (ITC) claims by the tax department and attract notices, interest, and penalties during GST audits.

4. Where can I find the official and most updated list of SAC codes?
The most reliable and authoritative source for the latest list of SAC codes is the official website of the Central Board of Indirect Taxes and Customs (CBIC). It is always recommended to refer to the official government portal for any changes or updates to ensure you remain compliant.

5. Is the SAC code mandatory for all businesses that provide services?
Yes, if your business is registered under GST, it is mandatory to mention the correct SAC code on all tax invoices you issue and to report it accurately in your GST returns (like GSTR-1). The SAC code applicability for BPO in India, and for all other service providers, is universal for all GST-registered entities.